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The National Electric Power Regulatory Authority (NEPRA) has allowed a meagre 20-paisa per unit increase in electricity tariffs under the first quarterly adjustment for the fiscal year 2024-25. This adjustment will be applicable to consumers of all DISCOs and K-Electric except the lifeline customers, who are exempted from this increase.
A Closer Look at the Decision
NEPRA, after careful analysis of data filed by DISCOs and a public hearing held on November 20, 2024, agreed to revise the tariff as this would reflect the changes in the generation cost of electricity as well as the operational expenses faced in the first quarter of FY 2024-25.
The adjustment will replace the former quarterly adjustment of Rs1.74 per unit, which was levied up to November 2024. With the new adjustment, consumers will see a drop of Rs1.54 per unit in comparison to the rates applicable for the previous quarter, hence a little relief amidst continuous economic turmoil
Pending Implementation
Although NEPRA has announced its decision, the new rates will come into effect only after the government formally notifies them. This procedure ensures that the new rates conform to the regulatory guidelines; therefore, the government should make an announcement about them soon.
Why the Hike is Important
Quarterly adjustments in tariffs are an integral part of the NEPRA regulatory framework. They are intended to ensure that the distribution companies remain financially viable. These adjustments cover variable costs of generation and operational costs, thereby ensuring a supply of electricity to consumers.
For cash-strapped DISCOs, such measures would be very important in solving liquidity problems, especially at a time when Pakistan continues to grapple with global energy price increases and fiscal constraints at home.
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Impact on Consumers
The adjustment is a mixed bag for electricity users. Although the 20-paisa increase might be heavy for some, it is less than the previous quarterly increases. Lifeline consumers, on the other hand, will remain exempt from this increase, which means they will continue benefiting from subsidized electricity, an almost silver lining to low-income households.
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The Bigger Picture
Frequent tariff adjustments reflect the broader challenges of Pakistan’s energy sector, including dependency on imported fuels, inefficiencies in power distribution, and mounting circular debt. As NEPRA continues balancing operational needs and consumer affordability, addressing these structural issues remains paramount.
The new adjustment, though minor, underscores the need for long-term reforms to stabilize the energy sector and shield consumers from frequent rate hikes.
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