Latest news with #TariffDifferentialSubsidy
Business Recorder
4 days ago
- Business
- Business Recorder
Nepra rejects govt plea to apply revised SoT to KE
ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has turned down the federal government's plea to apply a revised uniform Schedule of Tariff (SoT) to K-Electric (KE), based on the previously determined tariff for the January–March 2023 quarter— a move likely to frustrate the Power Division. Nepra's decision was revealed in a determination issued on Tuesday, which outlines a revised average uniform SoT of Rs 31.59/kWh for both power Distribution Companies (Discos) and K-Electric for the fiscal year 2025–26. This rate marks a reduction from the earlier Rs 32.73/kWh (excluding duties and taxes), reflecting an average decrease of Rs 1.14/kWh after factoring in a budgeted Tariff Differential Subsidy (TDS) of Rs 250 billion for FY 2025–26. In its formal request (Motion for Leave), the Power Division argued that under government policy, a uniform consumer-end tariff should be maintained across K-Electric and state-owned Discos— even post-privatisation— through a mix of direct and indirect subsidies. To achieve this, the KE tariff should be modified to align with Nepra's approved national uniform tariff structure, incorporating the proposed targeted and cross subsidies. DISCOs and KE: Nepra approves revised average uniform SoT The Power Division also referenced legal provisions— Section 7, 31(4), and 31(7) of the NEPRA Act and Rule 17 of the relevant rules— supporting its appeal for revised consumer-end tariff recommendations for K-Electric, to be effective from July 1, 2025. The motion included a request to update the SoT via an amendment to SRO No. 575(1)/ 2019. During the hearing, K-Electric's Director of Finance Ayaz Jaffer urged Nepra to use KE's most recent tariff (determined on May 27, 2025) instead of the older Jan–Mar 2023 rates to establish the uniform tariff. However, Naveed Qaiser of the Power Planning and Monitoring Company (PPMC) opposed the suggestion, pointing out that the federal government has already filed a review petition against the newer KE tariff determination. Therefore, he argued, the Jan–Mar 2023 tariff should be treated as the valid benchmark. The Authority said it understands that it determines revenue requirement/ tariff for Discos for each year. Ultimately, Nepra decided not to accommodate the Power Division's request. In its official determination, the regulator stated that despite the federal government's plea to use the Jan–Mar 2023 KE tariff as the basis for a uniform SoT, it opted to apply the rates from KE's latest approved tariff for FY 2023–24, as issued on May 27, 2025. Nepra announced a reduction in the uniform average tariff from Rs 35.50/kWh to Rs 34/kWh, indicating an overall decrease of Rs 1.50 per unit. The revised SoT for consumers will be as follows: (i) up to 50 units– lifeline (Rs 3.95/kWh;(ii) 51-100 units- lifeline Rs 7.74/kWh;(iii) 0-100 (protected) Rs 10.51/kWh;(iv) 101-200 (protected)Rs 13.01 /kWh; (v) 01-100(non-protected) Rs 22.44/kWh; (vi) 101-200(non-protected) Rs 28.91/kWh;(vii) 201-300(non-protected Rs 33.10/ kWh; and (viii) 300 & ToU (non-protected) Rs 41.78/kWh. Average uniform domestic tariff will be Rs 27.20/kWh with reduction of Rs 1.13/Kwh from 28.33/kWh. New commercial tariff has been fixed at Rs 45.43 per unit with a reduction of Rs 1.15/Kwh, general services, Rs 43.17/kWh, industrial Rs 33.48/kWh, Bulk Rs 41.76/kWh, agricultural Rs 30.75/kWh, others Rs 32.68/kWh. According to Nepra, total number of electricity consumers is 37,994,210 who are projected to consume 103,558/MkWh. The average tariff has been reduced to Rs 31.59/kWh for FY 2025-26 from Rs 32.73/kWh through re-basing. Power Division explained that capacity charges have been reduced by Rs.186 billion, despite additional impact of Rs.50 billion capacity charges of Jamshoro Coal Plant, as compared to the reference capacity charges for the FY 2024-25. This reduction is mainly on account of termination/ re-negotiations of IPP contracts and change in exchange rate assumption. The Authority also observed that the petitioner in its Motion and also during the hearing submitted that inter-disco tariff rationalisation is not aimed at raising any revenues for the federal government as it is within the determined consolidated revenue requirement of all the Discos for the FY 2025-26; rather the federal government would be providing a subsidy of Rs.249 billion to different consumer categories during the period. The Uniform Tariff so determined by the Authority includes impact of PYA of Rs.58.68 billion, to be passed on in a period of twelve months from the date of notification of the decision. It was further stated that there is no anomaly in the current industrial tariff structure as the total cost of B4— inclusive of both fixed and variable charges—is actually lower than B3, which is again lower than B2. This reflects the benefit of losses for consumers connected at high tension (HT) lines, as opposed to industrial consumers on low tension (LT) lines. It was explained that ToU (Time-of-Use) pricing plays a critical role in maintaining power system stability and economic efficiency. Peak hours are strategically designated to curb demand during periods of high system stress when marginal generation costs are at their highest. However, lowering the peak rate would necessitate an upward adjustment of the off-peak rate to meet the system's annual revenue requirement. This could disproportionately burden smaller industrial consumers and potentially reduce overall electricity sales, thereby exacerbating the revenue shortfall and contributing to further upward pressure on tariffs. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Business
- Business Recorder
DISCOs and KE: Nepra approves revised average uniform SoT
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday approved, in principle, a revised average uniform Schedule of Tariff (SoT) of Rs 31.59/kWh for power Distribution Companies (DISCOs) and K-Electric (KE) for FY 2025-26, amid serious concerns on the performance of Discos. The revised new tariff has been set at Rs 31.59/kWh, down from Rs 32.73/kWh, with an average reduction of Rs 1.14/kWh following the incorporation of a Tariff Differential Subsidy (TDS) of Rs 250 billion for the fiscal year 2025–26. Additionally, Nepra announced a reduction in the uniform average tariff from Rs 35.50/kWh to Rs 34/kWh, indicating an overall decrease of Rs 1.50 per unit. Uniform tariff: govt formally moves Nepra The Authority, comprising Member (Tech) Rafique Ahmad Shaikh, Member (KPK), Maqsood Anwar Khan (Development) officiated in the hurriedly convened public hearing. Power Division was represented by Additional Secretary (Power Finance) Mehfooz Bhatti and Naveed Qaiser from PPMC (Power Planning and Monitoring Company) shared information about rebasing of power tariff and responded to the questions raised during the hearing. According to the documents shared with NEPRA, all categories of consumers will get a relief of Rs 1.15/kWh (average Rs 1.14/kWh). However, the representative of Power Division avoided accepting that tariff relief of Rs 7.50/kWh announced by the Prime Minister is over. He argued that the relief in tariff which will end from June 2025, will be replaced with reduction in base tariff by Rs 1.15 per unit, Rs 0.45 per unit through elimination of PTV fee and Rs 0.90 per unit through discontinuation of Electricity Duty by provinces. 'The government's uniform average tariff is Rs 31.59/kWh for FY 2025-26 against Nepra's determined rate of Rs 34 per unit,' Naveed said requesting Nepra to allow the proposed new rebased uniform tariff so that reduced tariff is passed on to the consumers. During the public hearing, representatives from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and K-Electric raised several concerns. Rehan Jawed (FPCCI) demanded that industrial tariff be redesigned in consultation with industry as current industrial tariff mechanism is flawed. He requested Nepra not to approve Government's Motion of uniform tariff in current form as industry opposes it in its entirety. Director Finance KE, Ayaz Jaffer urged Nepra to ensure that KE's tariff is adjusted in line with the latest determinations. The representative of Power Division noted that federal government has challenged Nepra's tariff determinations of KE; and suggested that as per TDS agreement between GoP and KE, the latter has legal permission to file TDS claims as per latest determinations. Nepra's legal counsel, Mian Ibrahim stated that the Power Division has no legal authority to override Nepra's tariff decisions. Meanwhile, Arif Bilwani criticized Nepra for scheduling the hearing on a public holiday, arguing that it restricted public access and transparency, especially for consumers. One of the key concerns discussed was the tariff structure post July 1, 2025, particularly the expiration of the Prime Minister's Rs 7.50/kWh relief package. According to Aamir Sheikh, representing the industrial sector, the net reduction from the new tariff is only Rs 1.15/kWh, whereas the PM's Rs 6/kWh relief ended in June, and an additional Rs 1.55/kWh relief will expire in July. This implies that despite the official reduction, industries may face a net increase of Rs 5/unit, potentially rendering their operations financially unsustainable. Sheikh called on the Prime Minister to allocate funds from the Carbon Levy on furnace oil and the gas levy to continue providing relief in electricity tariffs for the industrial sector. Tanveer Barry representative from KCCI said that he was attending the hearing as a protest because only one day was given for preparation, and suggested that Nepra should give 7 days for comments. He contended that on the one hand Rs 1.15/kWh relief was not enough while on the other hand government imposed Rs 3.23/kWh circular debt surcharge. 'The government had announced that after negotiations with IPPs consumers will get a big relief next fiscal year but no big relief is seen. Nepra should reduce fixed charges. Peak hours and off peak should be abolished so that industry may be run 24 hours at the same tariff,' he continued. Regarding net metering 1MW cap on industrial export should be lifted. This will allow discos to procure cheaper electricity and improve their average cost of supply while promoting clean energy. New industrial connections or load enhancement should be processed within 30 days. Member (Tech) expressed serious concerns on the performance of Discos especially fudging in meter reading to recover inflated bills. He said, inquiries of Discos have been conducted on this issue and currently an inquiry is in process against SEPCO. Dr. Kashif, CEO PITC informed the hearing that the purpose of 'Apna Meter, Apni Reading' App is to get rid of overbilling in Discos. On the issue of solarization, the representative of Power Division, sought Nepra's support in sorting out this issue as other consumers are paying for the cost of net metering consumers. Copyright Business Recorder, 2025
Business Recorder
23-05-2025
- Business
- Business Recorder
Power generation rises — but at what cost?
Finally, there is some surge in power generation (read: consumption). It increased by 22 percent year-on-year in April 2024 to reach 10,513 GWh, almost matching the reference generation level. Multiple factors are contributing to this increase. One reason is the reduction in the power tariff for the April–June period, which is encouraging higher consumption from the grid. Another factor is the shift of captive power consumers to the grid, as gas has become prohibitively expensive for them. The third contributor is higher-than-usual temperatures in April, which drove up air-conditioning demand. However, the increase in generation is primarily from expensive imported sources. RLNG-based generation rose by 10 percent year-on-year and was 42 percent higher than the reference generation. Imported coal-based generation jumped to 1,054 GWh from almost zero in April last year—115 percent higher than the reference. In contrast, cheaper indigenous sources saw a decline. Nuclear power generation fell by 8 percent year-on-year and was 22 percent below the reference, while hydropower increased by 11 percent year-on-year but still lagged 29 percent behind the reference level. As a result, the Fuel Cost Adjustment (FCA) turned positive in April 2025 for the first time in nine months, rising by Rs1.27 per unit to Rs8.95 per unit. The key questions now are: How sustainable is this increase in power generation? And why is the generation mix skewed toward more expensive sources? The power tariff reduction includes components that are expected to continue into the next fiscal year. One such component is the Tariff Differential Subsidy (TDS), which may persist due to higher petroleum levies. Another is the Quarterly Tariff Adjustments (QTA), including concessions from IPPs, which are likely to be incorporated into the next year's base tariff. Overall, the reduction in tariffs is expected to persist and should continue to incentivize higher grid-based consumption. This trend is also prompting captive power users to transition to the grid. Captive plants used 110,000 bbtu of gas annually; at 40 percent efficiency, that equates to 12,907 GWh. If 50 percent of that demand shifts to the grid, it could increase monthly consumption by around 500 GWh. This appears to be happening and may continue. Household consumption is closely tied to weather patterns. The national average temperature in April 2025 was 27.9°C—significantly higher than the long-term average of 24.5°C—ranking as the second highest April temperature in 65 years. There may be fluctuations in air-conditioning demand in the coming months depending on weather variations, though temperatures in May 2025 have continued to rise. Industrial demand, on the other hand, is expected to remain elevated through FY26. As for the second question—why the merit order was distorted and why increased generation came from costlier fuels—sources indicate that nuclear generation in the south was constrained due to technical issues and was replaced by imported coal. In the north, lower hydel generation—caused by reduced water availability—was partially offset by increased reliance on RLNG. Furthermore, excessive RLNG usage may be linked to surplus volumes of must-import RLNG, as captive consumers have begun shifting away from it. Hydel generation is likely to remain weak this season, while RLNG consumption may stay elevated. This will continue to exert upward pressure on FCA, potentially offsetting the benefit from lower QTA and TDS. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Targeted power subsidies under BISP: Roadmap submitted to IMF, World Bank
ISLAMABAD: The government has reportedly submitted a roadmap to the International Monetary Fund (IMF) and the World Bank to extend targeted power subsidies to beneficiaries of the Benazir Income Support Programme (BISP), well-informed sources told Business Recorder. The move is part of a broader energy sector reform aimed at reducing inefficient consumption, curbing losses, and supporting Pakistan's climate mitigation goals. The current subsidy structure—characterized by blanket tariff differentials and cross-subsidies—has led to overconsumption and has often benefited wealthier consumers, undermining the sector's financial viability. The design has jointly been prepared by a Committee headed by PASS Division and issues and bottlenecks removed. Direct subsidy reform is also part of the RSF program of the IMF as a major reform measure. IMF assured: Power, gas subsidies will be aligned with BISP Accordingly, after a series of meetings between Power, BISP and the Finance Division and with the support of World Bank, a draft road map was prepared and shared with the IMF during recent meetings. As per the new timelines agreed with IMF identification and verification of eligible consumers to be completed by December 31, and June 2026, the government has to finalize the criteria and from FY 2027 budget there shall be no Tariff Differential Subsidy (TDS) but the allocation will be for direct subsidy to only eligible consumers and final timeline to shift on this roadmap is January 2027. The sources said Minister for Power has taken the first review of roadmap and has directed Power Planning and Management Company (PPMC) to evaluate impact on consumers which is expected by mid-May 2025 followed by the plan to be presented to the Prime Minister after which Cabinet approval shall be initiated, expected by mid-June 2025. The sources further stated that the government has assured the IMF that electricity and gas subsidies will be aligned with the BISP to ensure that only low-income households benefit from the relief, sources in the Finance Ministry revealed. A similar approach is under consideration for gas subsidies, with an assessment due by June 2026 to determine feasibility. Additionally, to boost energy efficiency, Pakistan will enforce Minimum Energy Performance Standards (MEPS) for appliances such as fans, LEDs, refrigerators, ACs, and motors by June 2027. New procurement regulations mandating MEPS compliance at federal and provincial levels will be introduced by December 2025. The National Energy Efficiency and Conservation Authority (NEECA) will begin quarterly reporting on MEPS adoption starting December 2025. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Targeted power subsidies under BISP: Roadmap submitted to IMF and World Bank
ISLAMABAD: The government has reportedly submitted a roadmap to the International Monetary Fund (IMF) and the World Bank to extend targeted power subsidies to beneficiaries of the Benazir Income Support Programme (BISP), well-informed sources told Business Recorder. The move is part of a broader energy sector reform aimed at reducing inefficient consumption, curbing losses, and supporting Pakistan's climate mitigation goals. The current subsidy structure—characterized by blanket tariff differentials and cross-subsidies—has led to overconsumption and has often benefited wealthier consumers, undermining the sector's financial viability. The design has jointly been prepared by a Committee headed by PASS Division and issues and bottlenecks removed. Direct subsidy reform is also part of the RSF program of the IMF as a major reform measure. IMF assured: Power, gas subsidies will be aligned with BISP Accordingly, after a series of meetings between Power, BISP and the Finance Division and with the support of World Bank, a draft road map was prepared and shared with the IMF during recent meetings. As per the new timelines agreed with IMF identification and verification of eligible consumers to be completed by December 31, and June 2026, the government has to finalize the criteria and from FY 2027 budget there shall be no Tariff Differential Subsidy (TDS) but the allocation will be for direct subsidy to only eligible consumers and final timeline to shift on this roadmap is January 2027. The sources said Minister for Power has taken the first review of roadmap and has directed Power Planning and Management Company (PPMC) to evaluate impact on consumers which is expected by mid-May 2025 followed by the plan to be presented to the Prime Minister after which Cabinet approval shall be initiated, expected by mid-June 2025. The sources further stated that the government has assured the IMF that electricity and gas subsidies will be aligned with the BISP to ensure that only low-income households benefit from the relief, sources in the Finance Ministry revealed. A similar approach is under consideration for gas subsidies, with an assessment due by June 2026 to determine feasibility. Additionally, to boost energy efficiency, Pakistan will enforce Minimum Energy Performance Standards (MEPS) for appliances such as fans, LEDs, refrigerators, ACs, and motors by June 2027. New procurement regulations mandating MEPS compliance at federal and provincial levels will be introduced by December 2025. The National Energy Efficiency and Conservation Authority (NEECA) will begin quarterly reporting on MEPS adoption starting December 2025. Copyright Business Recorder, 2025
