ISLAMABAD: The federal government on Friday notified a hike in electricity prices up to Rs 7.12 per unit for domestic consumers from base tariff of Rs 29.78/KWh in FY24 to Rs 35.50/KWh in FY25. On July 11, 2024, National Electric Power Regulatory Authority put a rubber stamp on the increase and alteration proposed by the Power Division to meet IMF conditions.

The energy charges increased to Rs 10.94/KWh from Rs 7.63/KWh, while capacity charges rose by PKR 1.38/KWh to hit Rs 18.39/KWh.

The notification has to be shared with the IMF prior to Finance Minister Muhammad Aurangzeb’s visit to Washington for a new package of $6-7 billion.

The primary reason for the increase in energy charges was due to the assumption of higher dispatch of RLNG for generation and lower utilization of both local and imported coal compared to the assumptions made for FY24. Additionally, capacity charges rose due to assumption of devaluation of PKR against USD and addition of new capacity.

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Moreover, previously for different categories of industries PKR 440-550/KW/month of fixed charges were applicable based on 50% of the sanctioned load or actual Maximum Demand Indicator (MDI), whichever is higher. Now fixed charges are set flat at PKR 1,250/KW/month based on 25% of sanctioned load or actual MDI, whichever is higher.

Furthermore, for residential consumers NEPRA has increased the fixed charges from PKR 200-500/KW/month to PKR 500-2000/KW/month. We estimate that additional revenue of PKR 66.2bn will be collected amid rise in fixed charges.

The federal government decided to waive off the impact of rebasing for both protected and non-protected, non-ToU consumers, using up to 200 units from Jul’24 till Sep’24. This delay in upward revision would increase the tariff differential subsidy by PKR 50bn, which will be funded by reducing the PSDP.

Copyright Business Recorder, 2024