Oil Users to Pay Rs58B for PM Power Relief Plan
Staff Report
The oil consumers will provide Rs 58 billion additional petroleum levy to fund PM Power Relief Plan.
The National Electric Power Regulatory Authority (NEPRA) held a public hearing on Thursday to consider the Federal Government’s request for a Rs. 1.71 per unit reduction in electricity prices for consumers across Pakistan, including Karachi.
During the hearing, concerns were raised about the burden being placed on grid-connected users due to rising net metering connections which were translating into a tariff increase of Rs. 1.5/kWh. In response, NEPRA officials stated that the government is actively deliberating on the issue and is expected to announce a decision soon.
They added that adjustments may also be introduced during the upcoming tariff rebasing to ensure fairness while protecting grid consumers. Recently, the Ministry of Energy had shared stats based on which the net metering consumers had risen to 283,000 driving higher electricity tariff for grid-based consumers with the collected impact expected to rise to 424 billion in a decade.
The proposed decrease in tariff is to be implemented through an increase in the Tariff Differential Subsidy (TDS), with the government already securing cabinet approval before filing the request with NEPRA. The relief will be applicable to all power distribution companies, including K-Electric, for a period of three months. However, officials clarified that lifeline consumers will not benefit from this reduction.
According to Power Division officials, the government aims to offset the cost through savings generated by maintaining stable petroleum prices over the next three months, which are expected to amount to Rs. 58 billion.
Additional relief is being provided through adjustments in power purchase agreements, with Rs. 12 billion saved from negotiations with Independent Power Producers (IPPs) already included in the recent quarterly tariff adjustment. The government is also actively negotiating with banks to manage the circular debt issue. These talks are part of a broader strategy to finalize a financial arrangement that can help reduce the mounting liabilities within the power sector.
The government is currently providing Rs. 266 billion in TDS to bridge the gap in actual and notified tariffs, a figure that could rise to Rs. 324 billion with this latest proposal. Officials said relief to consumers is being provided through quarterly adjustments instead of annual rebasing due to current economic conditions.
Negotiations with 32 IPPs have concluded, with hearings for 7 already conducted at NEPRA. Savings from these agreements, particularly Rs. 12 billion from 5 IPPs, which are being passed on to consumers through tariff adjustments.
NEPRA officials confirmed that a Rs. 1.36 per unit relief has already been granted under the fuel charge adjustment (FCA), and with the proposed Rs. 1.71 reduction, consumers could receive immediate relief of approximately Rs. 5.03 to Rs. 5.04 per unit cumulatively.
The authority will now review the submitted data and issue a formal decision. Power Division officials emphasized that the continuation of relief measures will depend on macroeconomic stability, noting that the current financial situation does not allow for an annual tariff rebasing, which is why quarterly adjustments are being used instead. The third quarterly tariff adjustment request is expected to be submitted in the second week of April.The Consumers to Enjoy Cut in Electricity Rates in Bills