Islamabad – Consumers in Pakistan are poised to receive substantial relief as electricity tariffs are set to decline in the coming months.
Power Distribution Companies (Discos) have formally petitioned the National Electric Power Regulatory Authority (Nepra) for a negative adjustment of up to Rs 52.123 billion (approximately Rs 2 per unit) under the Quarterly Tariff Adjustment (QTA) mechanism for the second quarter of FY 2024-25.
The anticipated tariff reduction will directly benefit millions of consumers nationwide, with the revised rates expected to take effect from March 2025. Nepra is scheduled to conduct a public hearing on February 12, 2025, to deliberate on the petitions submitted by Discos through the Central Power Purchasing Agency Guaranteed (CPPA-G). Of the total requested adjustment, Rs 50.658 billion stems from favorable exchange rate fluctuations (Rs 278/$ against a projected Rs 300/$) and a decline in interest rates. The impact of this QTA will span the months of March, April, and May, with the existing Paisa 19.5 per unit QTA set to expire on February 28, 2025.
In a significant policy move, Prime Minister Shehbaz Sharif is expected to announce an additional reduction of Rs 7 per unit for consumers, with a particular focus on the industrial sector. This reduction, set to commence in April 2025, will effectively translate into an overall cut of Rs 9-10 per unit. The relief is being facilitated through optimized capacity payments to Independent Power Producers (IPPs) and Government Power Plants (GPPs), ensuring tangible benefits for end-users.
The federal government asserts that its termination and renegotiation of power purchase agreements (PPAs) with multiple IPPs will yield annual savings of Rs 137 billion. These savings, part of a broader strategic initiative to trim energy costs by Rs 1.14 trillion, will be systematically transferred to consumers. The revised agreements, already sanctioned by the Federal Cabinet, are designed to introduce long-term financial sustainability in the power sector.
During a recent Federal Cabinet meeting, PM Shehbaz Sharif lauded the efforts of Minister for Power Sardar Awais Leghari and Special Assistant to the PM on Power Muhammad Ali for successfully renegotiating contracts with IPPs. The premier reiterated his commitment to alleviating the financial burden on consumers and emphasized that the reduction in electricity prices would be carried out in consultation with the International Monetary Fund (IMF) to maintain fiscal balance.
Nepra has clarified that under federal policy guidelines for uniform quarterly adjustments, the forthcoming QTA determination for Discos will also be extended to consumers under K-Electric’s jurisdiction. However, lifeline consumers benefiting from existing subsidies will not be included in the QTA relief package.
With this proactive approach, the government aims to mitigate the financial strain on consumers while promoting regulatory stability and sustainable power sector reforms. By ensuring reduced tariffs, Pakistan’s energy sector moves closer to affordability and efficiency, providing much-needed economic relief to households and businesses alike.