Islamabad, February 2, 2025: The government is poised to announce a significant reduction in electricity tariffs, bringing much-needed relief to consumers. Power Distribution Companies (Discos) have filed petitions seeking a negative adjustment of up to Rs 52.123 billion (approximately Rs 2 per unit) for the second quarter of FY 2024-25 under the Quarterly Tariff Adjustment (QTA) mechanism. If approved, this reduction will lower electricity prices for millions of consumers across Pakistan, starting from March 2025.
The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing on February 12, 2025, to review the petitions submitted by Discos through the Central Power Purchasing Agency Guaranteed (CPPA-G). Of the total requested negative adjustment, Rs 50.658 billion is attributed to a favorable exchange rate difference (Rs 278 per US dollar compared to the projected Rs 300 per dollar) and a decline in interest rates. The QTA adjustment will impact electricity tariffs for March, April, and May, as the existing Paisa 19.5 per unit QTA is set to expire on February 28, 2025.
Additionally, Prime Minister Shehbaz Sharif is expected to announce a further Rs 7 per unit reduction, particularly benefiting the industrial sector, from April 2025. This means that overall, electricity prices could decrease by Rs 9-10 per unit from April onward, driven by savings from capacity payments to Independent Power Producers (IPPs) and Government Power Plants (GPPs).
The government anticipates annual savings of Rs 137 billion through the termination of Power Purchase Agreements (PPAs) for five IPPs and the revision of contracts for eight bagasse-fired IPPs and 15 other IPPs. These savings, part of a broader effort to reduce energy costs by Rs 1.14 trillion, will be passed on to consumers. The revised contracts have already been approved by the Federal Cabinet.
During a recent Federal Cabinet meeting, PM Shehbaz Sharif commended Minister for Power Sardar Awais Leghari and SAPM on Power Muhammad Ali for their efforts in renegotiating agreements with IPPs, which will result in an initial Rs 7 per unit reduction. He also affirmed that any tariff reduction would be finalized in consultation with the IMF.
According to data shared with Nepra by CPPA-G, Discos have requested negative adjustments for the second quarter of FY 2024-25, including Rs 4.478 billion for IESCO, Rs 9.632 billion for LESCO, Rs 6.498 billion for GEPCO, Rs 10.989 billion for FESCO, Rs 10.628 billion for MEPCO, Rs 2.218 billion for PESCO, Rs 427 million for HESCO, Rs 1.772 billion for QESCO, Rs 3.024 billion for SEPCO, and Rs 3.309 billion for TESCO. Additional requested adjustments include Rs 2.691 billion for variable O&M, Rs 1.326 billion for Use of System Charges (UoSC) and Market Operator Fee (MOP), and Rs 166 million for the impact of incremental units.
Nepra has stated that, following the federal government’s policy guidelines on uniform quarterly adjustments, the third quarterly adjustment for FY 2024-25 determined by the Authority will also be applicable to K-Electric consumers. However, lifeline consumers who are already receiving subsidies will not benefit from QTA relief.
This expected reduction in electricity tariffs aims to ease the financial burden on consumers and industries, promoting economic stability and energy affordability across the country.
