Pakistan Increases Electricity Prices by PKR 5.72 per Unit

Pakistan’s federal cabinet has approved a hike in the basic power tariff by PKR 5.72 per unit, according to sources. The average electricity tariff will rise from PKR 29.78 to PKR 35.50, starting July 1, 2024. This decision aims to address the PKR 403 billion loss in the power sector for the fiscal year 2022-23.

The National Electric Power Regulatory Authority (NEPRA) will implement the new rates. The increase is also expected to help secure an IMF bailout by generating additional revenue for electricity distribution companies.

Reasons for the Increase

NEPRA’s report revealed that nine distribution companies, including K-Electric, did not achieve 100% recovery, leading to significant losses. The companies also did not purchase electricity as per their assigned quotas, resulting in deliberate loadshedding.

Future Implications

In June, NEPRA announced a nearly 20% increase in the uniform national tariff to secure approximately PKR 3.8 trillion in funding for the 10 ex-Wapda electricity distribution companies during the fiscal year 2024-25. This adjustment is expected to generate an additional PKR 485 billion in revenue, bolstering the government’s position in securing an IMF bailout slated for July.