Latest news with #NationalElectricityPolicy2021
Business Recorder
16-07-2025
- Business
- Business Recorder
Industrial power tariff: Power Div, APTMA at odds over cross-subsidy calculation
ISLAMABAD: The Power Division and the All Pakistan Textile Mills Association (APTMA) appear to be at odds over the actual volume of cross subsidy embedded in industrial power tariffs, with APTMA claiming that the burden is nearly twice what the Power Division reports. The dispute emerged at a time when the Power Division claims it is engaging with the industry to further reduce cross subsidies to ease the financial strain on industrial consumers. The Division had earlier announced a reduction of Rs 174 billion in cross subsidies. 'We do not agree with the Power Division's calculation of Rs 74 billion in cross subsidies in industrial power tariffs,' stated Shahid Sattar, Secretary General of APTMA, in a letter addressed to Power Minister Sardar Awais Khan Leghari. 'According to our analysis based on Nepra's determination of consumer-end tariffs for FY26, the actual cross subsidy amounts to at least Rs 137 billion.' PD uncertain on power tariff changes from July 1 APTMA defines cross subsidy as the difference between a consumer's cost of service, which includes generation, transmission, distribution, and associated margins, and the effective price charged by the government of Pakistan. Under Section 31(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, Nepra is mandated to determine a uniform tariff for public sector licensees in the interest of consumers. The National Electricity Policy 2021 also allows the government to propose uniform tariffs across consumer categories based on socioeconomic objectives, budgetary targets, and regulator recommendations. According to APTMA, power tariff determination results in two sets of tariffs: one determined by Nepra, which reflects the true cost of service across consumer categories, and another proposed by the government, which applies cross subsidies. Nepra's tables show that residential users consuming up to 300 units and non-ToU agricultural consumers are charged below-cost tariffs. In contrast, other consumer categories, including industry, pay higher-than-cost tariffs to cover the resulting revenue gap—effectively bearing the cross subsidy burden. 'Our calculations, using category-wise consumption data from the FY25 determination (due to lack of FY26 data), indicate a cross subsidy of nearly Rs 140 billion in industrial power tariffs. This figure may rise by 2–3% based on CPPA-G's projected demand growth for FY26,' APTMA noted. APTMA suggests that the Power Division's Rs 74 billion figure likely uses an average system-wide benchmark—such as the FY26 Power Purchase Price (PPP) of Rs 25.98/kWh—instead of Nepra's cost-reflective tariffs by category. Based on this method, APTMA acknowledges the cross subsidy may drop to around Rs 85 billion, closer to the government's estimate. However, APTMA insists the cross subsidy should be calculated against actual cost of service per consumer category, not a generalised average. 'If the goal is to deliver cost-reflective and competitive power tariffs, it's critical that government and stakeholders align on definitions and calculation methodologies.' APTMA reiterated its long-standing demand for a regionally competitive power tariff of 9 cents/kWh. This demand, it says, is supported not only by regional benchmarks (5–9 cents/kWh) but also by domestic cost-of-service studies that show tariffs for 83–84% of Pakistani consumers' hover around 9 cents/kWh. Nepra's own determination supports this, with industrial base rates set at Rs 21.65/kWh (off-peak) and Rs 30.76/kWh (peak) for July 2025, equating to roughly 9.5 cents/kWh before applying cross subsidies. On the issue of wheeling charges, APTMA argues that the current rate of about 4.5 cents/kWh undermines the viability of the Competitive Trading Bilateral Contract Market (CTBCM) for renewable energy. For a textile unit operating three shifts, only 20% of its energy demand can be met at a viable rate (~8 cents/kWh) through wheeling. The remainder must be sourced from the grid, where marginal costs—particularly from RLNG plants—total around Rs 37.79/kWh (or 13.4 cents/kWh), resulting in an average energy cost of 12.32 cents/kWh, significantly above the industry's target. APTMA emphasised the need for tariff predictability, which is crucial for long-term business planning. Volatile rates pose major challenges, particularly for exporters. The Association urged the Power Minister to reconsider wheeling charges and allow hybrid consumers (those using both CTBCM and grid power) to retain access to the industrial tariff, enhancing predictability and competitiveness. APTMA also acknowledged the government's new incremental consumption package, calling it a 'substantial improvement' over previous schemes, which were complex and impractical for industry adoption. 'We appreciate that industry feedback is now being actively considered in policy design,' the Association added. On the topic of industrial Time of Use (ToU) tariff reform, APTMA said it has recently engaged with Abid Lodhi and Naveed Qaiser at PPMC. 'They outlined several system constraints, and we are now developing a proposal for a more flexible ToU tariff structure, which we plan to submit in the coming weeks,' said Sattar. Copyright Business Recorder, 2025
Business Recorder
30-06-2025
- Business
- Business Recorder
Uniform tariff: govt formally moves Nepra
ISLAMABAD: The Federal Government has formally approached the National Electric Power Regulatory Authority (Nepra) to implement a uniform electricity tariff across the country, including Karachi, effective from July 1, 2025. This move incorporates subsidies earmarked for the fiscal year 2025-26. The federal government has reduced subsidy for power sector by 13 per cent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25. In its motion, the Power Division referred to NEPRA's determination of tariffs for distribution companies (Discos), announced on June 23, 2025. Under this determination, the national average tariff has been reduced to Rs 34 per kWh for FY 2025-26, down from Rs 35.50 per kWh in FY 2024-25. Nepra's decisions on KE tariffs: Power Div. flags potential consumers harm, urges revision The Federal Government's motion references the National Electricity Policy 2021, approved by the Council of Common Interests (CCI). Clause 5.6.1 of the policy emphasizes that the financial sustainability of the power sector depends on recovering the full cost of service—where feasible—through an efficient tariff structure that ensures liquidity. Clause 5.6.4 adds that financial self-sustainability should ultimately eliminate the need for government subsidies, except for targeted support to lifeline, industrial, or agricultural consumers. The Power Division further stated that, based on socio-economic objectives, budgetary targets, and NEPRA's consumer-end tariff recommendations for state-owned Discos, the government intends to continue pursuing a uniform tariff structure across all consumers and regions. Accordingly, NEPRA is requested to determine a uniform tariff—including quarterly adjustments—for all state-owned Discos in the interest of consumers. Section 31(4) of the NEPRA Act empowers the Authority to determine a uniform tariff for public sector licensees based on their consolidated accounts, ensuring consumer interest. As per this provision, NEPRA has historically included the impact of targeted subsidies and cross-subsidies in uniform tariffs. The most recent such tariff for Discos was determined on July 13, 2024, and notified on July 14, 2024. After reviewing the tariff schedules recommended by NEPRA on June 23, 2025, for all consumer categories, the Federal Government has decided that a uniform tariff should be applied per Section 31(4) of the NEPRA Act. The proposed uniform tariff reflects the government's economic and social policy, and is based on the consolidated revenue requirements approved for Discos owned and controlled by the Federal Government. This proposal was submitted for Cabinet approval on June 28, 2025, and is being forwarded to NEPRA in anticipation of that approval. The Power Division emphasized that tariff rationalization among Discos is not intended to generate additional federal revenue, but to align with constitutional and policy requirements within the revenue requirements determined for Discos. Once approved, the revised structure will enable NEPRA to determine the final uniform tariff under Section 31(7) of the Act, replacing the existing rates notified on July 14, 2024. The government also aims to maintain a uniform end-user tariff for K-Electric alongside state-owned Discos, even after any future privatization. This will be achieved through direct and indirect subsidies. Consequently, the variable charge applicable to KE will be modified to align with KE's revenue requirements as determined by NEPRA, factoring in proposed targeted and cross-subsidies. This proposal, too, has been submitted for Cabinet approval and is being forwarded to NEPRA in anticipation. In conclusion, the Power Division clarified that this motion has been filed under Sections 7 and 31 of the NEPRA Act, along with Rule 17 of the NEPRA Rules, to seek reconsideration and issuance of a uniform Schedule of Tariffs for Discos, incorporating subsidies and tariff rationalization. A separate motion has also been filed for KE under Sections 7, 31(4), and 31(7), to issue a modified variable charge and maintain national uniformity in consumer-end tariffs. NEPRA is scheduled to hold a public hearing on July 1, 2025 to put a stamp of approval on the Federal Government's motion for uniform tariffs across all regions, including K-Electric's service territory. Copyright Business Recorder, 2025
Business Recorder
16-06-2025
- Business
- Business Recorder
NEP & NE-Plan: PD accused of not providing audit documents
ISLAMABAD: The Directorate General of Audit (Power) has accused Power Division of not providing documents about National Electricity Policy 2021 and National Electricity Plan 2023-27 which are required for special audit purposes. In a letter to Secretary Power, Director Audit (Power) Meesam Abbas Khawaja, stated that he was given this audit assignment on June 02, 2025 and served three requisitions for provision of record required to satisfactorily complete the Special Audit assignmenton the implementation Status of National Electricity Policy 2021 and National Electricity Plan 2023-2027. However, no documents/auditable record had been provided so far, and Secretary Power has been requested to provide the requisite record along with supporting evidence on top priority basis to complete the assigned task within the stipulated period. The Directorate of Audit (Power) further stated that as part of ongoing review and monitoring of the National Electricity Plan implementation, the Audit is currently compiling detailed financial records to assess the effectiveness and transparency of expenditures associated with various components of the plan. In this regard, the Audit has sought comprehensive breakdown of expenditures related to the following areas: KE asks Power Div for consultation on NEP Meetings and Workshops: Total expenditure on meetings, workshops and consultations conducted in the context of the NEP & NE-Plan since 2020. A detailed list other types of meetings (e.g. planning sessions, stakeholder consultations. technical workshops) and their associated costs. Purchasing of equipment and materials: A breakdown of expenditures on the procurement of equipment materials, and technology related to the implementation of the NEP & NE-Plan. Specific details of any major equipment purchases or contracts signed for infrastructure development. Detail of expenditure for development of web-based Monitoring & Evaluation System (M&ES) may also be provided. Other miscellaneous expenditures: Any other expenditures incurred in the course of NEP & NE-Plan implementation that are not directly categorized under meetings or equipment. This includes, but is not limited to, costs associated with operational expenses, or any other relevant financial outlay. The requested details will support Audit's efforts to ensure that the funds allocated to the NEP & NE-Plan have been used effectively and in alignment with the goals and objectives set forth in the plan. Copyright Business Recorder, 2025
