ISLAMABAD: Consumers in the power sector are expected to receive relief of up to Rs 4 per unit in their April 2025 electricity bills, with an increase in the Tariff Differential Subsidy (TDS) by Rs 1.71 per unit, excluding lifeline consumers, for the fourth quarter (April-June 2025) of the current fiscal year. This applies to the consumers of Discos and K-Electric.
In this regard, the Power Division has submitted a motion to National Electric Power Regulatory Authority (NEPRA), stating that the federal cabinet approved the proposal to increase the TDS in its meeting on March 26.
Nepra will hold a public hearing on April 4, 2025, to review and approve the government’s plan to pass on the Rs 1.71 per kWh impact to consumers nationwide.
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Sources told Business Recorder that the increase in TDS is based on an assumption of Rs 160 billion in revenue from the Petroleum Levy (PL) at a rate of an additional Rs 10 per litre on POL products. On March 15, 2025, the Prime Minister’s Office had announced that the impact of the additional Rs 10 per litre Petroleum Levy would not be passed on to the public.
The additional PL of Rs 10 per litre was imposed with the understanding that the revenue generated from this levy would be used to reduce electricity tariffs. Sources indicate that Ogra has projected monthly collections of Rs 40 billion from this levy for the quarter, resulting in an annual impact of Rs 160 billion. However, another source suggested the total collection from the PL could reach Rs 58 billion (Rs 40 billion from April to June and Rs 18 billion for the first 15 days of March 2025).
The Rs 1.71 per unit reduction in tariffs for the fourth quarter will add to the Rs 2 per unit reduction in the Quarterly Tariff Adjustment (QTA) for the second quarter of the current fiscal year. “Consumers will lose the FCA relief of Rs 2 per unit in April, but they will benefit from the Rs 1.71 per kWh reduction, implying a combined tariff reduction of approximately Rs 4 per unit in April,” an official explained.
Additionally, a further reduction of up to Rs 8 per unit in electricity tariffs is expected next month, pending formal approval of revised agreements with Independent Power Producers (IPPs) by NEPRA.
Arshad Mohmand, Special Secretary of the Power Division, stated that the tariff reduction is still being finalized. A committee, led by Deputy Minister/Foreign Minister Ishaq Dar, is working on the matter in collaboration with an Energy Task Force led by Power Minister Sardar Awais Khan Leghari. Negotiations with the International Monetary Fund (IMF) are ongoing regarding the expected reduction of Rs 8-10 per unit. Most of this reduction is expected to stem from savings of around Rs 4 trillion from revised or terminated contracts with IPPs and Gas Power Plants (GPPs).
The Power Division noted that Nepra’s determinations on July 11 and 13, 2024, set the national average rate for FY 2024-25 at Rs 35.50 per kWh. However, the government notified a national average tariff of Rs 32.99 per kWh (effective from October 2024), bridging the gap through the TDS. The government has also maintained a uniform consumer-end tariff for K-Electric consumers through the incorporation of TDS.
In line with the government’s efforts to reduce consumer tariffs and enhance demand, the federal government has decided to increase the tariff differential subsidy for electricity consumers for the April to June 2025 period. The additional TDS for all consumers of Discos and K-Electric (except lifeline domestic consumers) is estimated to be Rs 1.71 per kWh.
The matter was approved by the Cabinet on March 26, 2025, and will be submitted to Nepra for consideration and approval under Section 31 of the Act. Once approved by Nepra, the reduction in TDS will be notified by the federal government.
Copyright Business Recorder, 2025
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