ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) on Friday directed Power Division to clear confusion in the minds of consumers especially in the industry.
Presiding over a public hearing on Government’s Motion to reduce tariff by Rs 1.71 per unit on account of additional Petroleum Levy of Rs 58.6 billion for three months, Chairman NEPRA said that working to firm up Prime Minister’s announcement of reduction in tariff by Rs 7.69 per unit for the industry and Rs 7.41 per unit for domestic consumers except lifeline consumers.
He said that that consumers will get immediate relief of Rs 5.03 per unit within next few days whereas the remainig relief will be extended in the QTA of third quarter.
Additional Secretary Power Division Mehfooz Bhatti said that the amount of subsidy has been increased to Rs 266 billion after addition of Rs 58.6 billion on account of PDL.
Industrialist Aamir sheikh said that firstly the industry appreciates the reduction in tariff. Chairman has mentioned tariff relief of Rs 5 per unit whereas PD has said it is Rs 6 per unit.
Relief in QTA will be – Rs 1.9 per unit, TDS, Rs – 1.71 per unit, FPA – Rs 1.36 ( Rs. 0.46 + Rs 0.90 per unit) However, just to clarify from what I understood from the hearing
The FPA was Rs 2 per unit January 2025 but has reduced to Rs 0.46 per unit now so tariff increase from Jan is about Rs 1.5/unit meaning thereby net relief as compared to January is only 3/unit. FPA is floating so industry cannot add that to its relief calculation anyways. The only thing pending is next QTA.
“I hope NEPRA clarifies if the relief for the next QTA will be given to consumer in this quarter i.e. Apr to Jun (we will be getting 2 QTA simultaneously) or it will be finalised now but given to consumers in Jul-Sep. Assuming next QTA is given in this quarter and is about -1/unit, clarification would enable us to assume a net relief of around 4/unit so we can do export sales accordingly,” he added.
Arif Bilawani and Tanveer Barry also sought clarifications on some of the points raised during the hearing.
Chairman Nepra also highlighted Authority,s decision of April 3, 2025 saying that the decision of Rs 0.90 per for not properly highlighted . According to the decision in light of Power Division letter of February 26, 2025 regarding applicability of negative FCA to non-protected domestic and agriculture categories, the Authority during reconciliation of negative FCA’s not passed on to the consumers from July 2024 till February 2025, with CPPA-G, PITC and Discos, observed that impact of such retained amounts works out as Rs.23 billion for the period July 2024 till February 2025.
In past such retained amount was adjusted in the overall subsidy claims of Discos, however, owing to recent letter of MoE, the matter was deliberated upon. In light of discussions , the Authority has decided to pass on the impact of such negative retained FCA’s of Rs.23 billion to all consumers (except life line and protected domestic category) for a period of three ) month i.e. April to June 2025. The benefit of Rs. 23 billion shall be passed on to these consumers Rs.0.90/kWh, based on projected sales from April to June 2025, as per the notified tariff excluding the sales of life line and protected consumers. The impact of any under/over recovery of the allowed amount shall be made part of PYA by Discos in their upcoming tariff petitions.
The government has recently increased the rate of petroleum levy from Rs 60 per liter to Rs 70 per liter each on petrol and diesel. It had announced to redirect the impact of petroleum levy to electricity consumers.
Now, oil consumers are said to provide Rs 58 billion additional petroleum levy to cross subsidize the electricity consumers.
During the public hearing, the National Electric Power Regulatory Authority (NEPRA) directed the Power Division to clear the confusion in the minds of consumers, especially in the industrial sector.
Presiding over a public hearing on the government’s motion to reduce the tariff by Rs 1.71 per unit on account of an additional Petroleum Development Levy (PDL) of Rs 58.6 billion for three months, NEPRA Chairman stated that work is underway to firm up the Prime Minister’s announcement of a reduction in the power tariff by Rs 7.69 per unit for industrial consumers and Rs 7.41 per unit for domestic consumers, excluding lifeline users.
He added that consumers would receive an immediate relief of Rs 5.03 per unit within the next few days, while the remaining relief would be provided in the Quarterly Tariff Adjustment (QTA) for the third quarter.
The proposed decrease in tariff is to be implemented through an increase in the Tariff Differential Subsidy , with the government already securing cabinet approval before filing the request with NEPRA. The relief will be applicable to all power distribution companies, including K-Electric, for a period of three months. However, officials clarified that lifeline consumers will not benefit from this reduction.
According to Power Division officials, the government aims to offset the cost through savings generated by maintaining stable petroleum prices over the next three months, which are expected to amount to Rs. 58 billion.
Additional relief is being provided through adjustments in power purchase agreements, with Rs. 12 billion saved from negotiations with Independent Power Producers (IPPs) already included in the recent quarterly tariff adjustment.
The government is also actively negotiating with banks to manage the circular debt issue. These talks are part of a broader strategy to finalize a financial arrangement that can help reduce the mounting liabilities within the power sector.
Officials said relief to consumers is being provided through quarterly adjustments instead of annual rebasing due to current economic conditions.
Negotiations with 32 IPPs have concluded, with hearings for 7 already conducted at NEPRA. Savings from these agreements, particularly Rs. 12 billion from 5 IPPs, which are being passed on to consumers through tariff adjustments.
NEPRA officials confirmed that a Rs. 1.36 per unit relief has already been granted under the fuel charge adjustment (FCA), and with the proposed Rs. 1.71 reduction, consumers could receive immediate relief of approximately Rs. 5.03 to Rs. 5.04 per unit cumulatively.
The authority will now review the submitted data and issue a formal decision. Power Division officials emphasized that the continuation of relief measures will depend on macroeconomic stability, noting that the current financial situation does not allow for an annual tariff rebasing, which is why quarterly adjustments are being used instead.
The third quarterly tariff adjustment request is expected to be submitted in the second week of April.
During the hearing, concerns were raised about the burden being placed on grid-connected users due to rising net metering connections which were translating into a tariff increase of Rs. 1.5/kWh.
In response, NEPRA officials stated that the government is actively deliberating on the issue and is expected to announce a decision soon.
They added that adjustments may also be introduced during the upcoming tariff rebasing to ensure fairness while protecting grid consumers. Recently, the Ministry of Energy had shared stats based on which the net metering consumers had risen to 283,000 driving higher electricity tariff for grid-based consumers with the collected impact expected to rise to Rs 424 billion in a decade.
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