Power Division Rules Out New Power Surcharge on Bills

Staff Report

Islamabad: Power division said on Tuesday that there is no plan to impose power surcharge on electricity bills following commercial loans taken from banks to retire circular debt.

The power division official informed during a public hearing conducted to consider a motion of power division to cut power tariff up to Rs 1.15 per unit due to rebasing of power tariff.

The power division informed that national average tariff would be reduced from Rs 32.73 per unit to Rs 31.59 per unit, registering a decline of average Rs 1.14 per unit.

Officials said that base tariff of all consumers except lifeline would enjoy a relief of Rs 1.15 per unit.

Power Division Pushes Service Agreements for Captive Power Units

Tanveer Bari representing Karachi Chamber of Commerce raised issue of new power surcharge on electricity bills.He said that government was going to give relief of Rs 1.15 per unit whereas was going to impose a new surcharge of Rs 3.23 per unit due to loans taken from banks.

He said that this surcharge could go higher in case electricity consumption is reduced.

 He further protested over giving only one day to consider motion and some other people had also approached Nepra for giving at least seven days in this regard.

He pleaded not to approve this motion,” he said. He added government had claimed big relief in response to deal with IPPs deals but it was very low relief.

He also criticized for increasing fixed charges for industry. He demanded to remove cap for net solar metering for industry to boost industrial activity.

The Power Division petitioned under Section 31 of Nepra’s Act, reiterating that the July 13, 2024 determination averaged Rs 34/kWh, down from Rs 35.50 the prior year. Under this, the federal government has proposed a national uniform tariff, including KE, with subsidies and surcharges adjusted accordingly. They further claimed the Rs 1.15/unit for FY25-26 rollback reflects the first meaningful adjustment in years.

However, industrial representatives voiced strong opposition to the proposal, with the Karachi Chamber of Commerce outright rejecting the revised tariff. Rehan Javed representing Korangi Association of Trade and Industry (KATI) expressed dissatisfaction with the process, emphasizing the need for predictability in the tariff structure. He added that the lack of consultation has left the industrial sector disengaged and unable to align with the proposed changes.

Tanveer Barry also representing KCC, balked at the lack of consultation—mentioning that all the promises from the government never transpired into action. Barry objected that more time should have been given to gather stakeholder comments and hearing should have been postponed until sufficient comments were received, drawing parallels to the FCA notice that was delayed last minute by Power Division.

Industry players acknowledged the minor reduction might seem welcome, but warned it masks deeper cost erosion. As Tanveer Barry put it, “we have to pay off the surcharge for the next years – so should we be happy or sad”? Aamir Sheikh echoed this frustration: although the base tariff falls, the cumulative effect leaves his rates elevated, complaining “1.15 is being reduced but it feels like my tariff is going up because all the reliefs are being taken away”—adding that rebasing based on market rates may actually have led to a Rs 5/unit net increase. Key demands emerged:

KE’s representative insisted KE’s TDS-based subsidy package insulates it from tariff volatility and pledged to file base tariff reviews quarterly. He further clarified that during a tariff review, no automatic suspension occurs—the current rates remain in effect until a final decision is made.

Nepra members, while receptive, concluded the hearing and a decision will be taken after deliberations. However, the session left something to be desired—particularly for industrial stakeholders who sought greater clarity on the federal government’s promised reforms. Questions remained around the status of IPP contract renegotiations and whether these would lead to any meaningful reductions in capacity payments, which continue to burden end consumers. For many, the Rs 1.15/unit base tariff cut seemed more symbolic than structural, with uncertainty lingering over whether the broader relief measures promised by the government will materialize in the near term.