By SKM
June 29, 2025
ISLAMABAD: The central government has asked NEPRA to ensure uniform rate across the country including the territory of K. Electric by incorporating subsidies, surcharges and inter-disco tariff rationalization from July 1, 2025
Power Division, in its Motion has referred to the tariffs for Discos announced by NEPRA on June 23, 2025, in which national average tariff has been reduced to Rs 34 per unit for 2025-26 from Rs 35.50 per unit of FY 2024-25.
NEPRA will hold a public hearing tomorrow (on July 1, 2025) on the Federal Government’s Motion for uniform tariff across the country including for KE’s service territory.
Power Division is of the view that the inter-distribution companies’ tariff rationalization is not aimed at raising any revenues for the Federal Government, as it is within the determined revenue requirements of the Discos consolidated in the terms of section 31 (4) of the Act. The tariff rationalization enables the fulfilment of the parameters set forth in the Constitution as well as the Policy.
” Once considered and approved, the same will lead to determination of “uniform final tariff””, in terms of section 31 (7) of the Act, for notification by the Federal Government with effect from July 1st, 2025, to the extent of modification of existing rates notified on July 14, 2024, read in conformity with earlier issued applicable notifications,” said Power Division in its Motion.
As per the Policy, the government may maintain a uniform consumer- end tariff for K-Electric and State-Owned Distribution companies (even after privatization) through incorporation of direct / indirect subsidies.
Accordingly, KE applicable uniform variable charge is required to be modified to recover the revenue requirements of KE determined by NEPRA keeping in view the proposed targeted subsidy and cross subsidies, which will also be consistent with the proposed uniform national tariff of Discos.This has also been submitted for approval of the Federal Government and in anticipation of the approval, the same is submitted to the Authority for consideration in terms of the provisions of the Act.
The federal government has reduced subsidy for power sector by 13 percent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25. The amount of subsidy for Inter-Disco tariff differential has been slashed to Rs 249.136 billion for 2025-26 from allocation of Rs 276 billion for FY 2024-25, showing a reduction of 9.8 per cent. Subsidy for tariff differential to agri tubewells in Balochistan will be Rs 4 billion in 2025-26 from Rs 9.5 billion in 2024-25. The amount of subsidies for merged districts of KP erstwhile FATA has been reduced over 38 per cent to Rs 40 billion for FY 2025-26 from Rs 65 billion for FY 2024-25.
The government has also slashed the amount of subsidy for AJK by 31.5 per cent to Rs 74 billion for 2025-26 from Rs 108 billion for FY 2024-25. The amount under Pakistan Energy Resolving Fund (PERA) will remain at Rs 48 billion for FY 2025-26 like FY 2024-25. This amount is meant to pay Rs 5 billion every month to Chinese IPPs established under China Pakistan Economic Corridor (CPEC).
For K-Electric, the amount of subsidy has been reduced over 28 per cent to Rs 125 billion for FY 2025-26 from Rs 174 for the FY 2024-25, however, Rs 1 billion have been allocated as subsidy for agriculture tube-wells in Balochistan for FY 2025-26 against Rs 500 million for FY 2024-25.
After explaining the background Power Division has stated that Motion is being filed by the Federal Government with respect to Consumer end tariff recommendations of Discos under section 7 and 31 of the Act read with Rule 17 of the Rules, so as to reconsider and issue the uniform schedule of tariff of Discos, by incorporating targeted subsidy and terssitiry of K>Electrci pursuant to guidelines for the category of each of NEPRA determined notified rate (inclusive of subsidy/tariff rationalization surcharge/ inter disco tariff rationalization).
The Motion is also being filed by the Federal Government with respect to Consumer end Tariff Recommendations of KE, under section 7, 31 (4) and 31 (7) of the Act read with Rule 17 of the Rules, so as to reconsider and issue for KE, modified uniform variable charge, to maintain uniform tariff across the country, so as to recover the revenue requirements of KE determined by the Authority, keeping in view the proposed targeted subsidy and cross subsidies. The Authority is, accordingly, requested to issue revised Schedule of Tariff after incorporating tariff rationalization to be notified with effect from July 1st, 2025, in the official gazette by way of modification in SRO No. 575(1)/2019 as modified from time to time.
The government’s Motion says: “ National Electricity Policy, 2021 approved by the Council of Common Interests (CCI) which provides under Clause 5.6.1 that ‘financial sustainability of the sector is premised on the recovery of full cost of service, to the extent feasible, through an efficient tariff structure, which ensures sufficient liquidity in the sector’ and vide Clause 5.6.4 it states that ‘in due course, financial self-sustainability will eliminate the need for Government subsidies (except for any subsidies for lifeline, industry or agriculture consumers, as per prevailing Government considerations).”
Power Division has further stated that that in view of various parameters, including (i) the socio-economic objectives; (ii) budgetary targets in field; and (iii) recommendations of the Regulator with respect to consumer-end tariff for each State-Owned Distribution company, the Government may continue to propose uniform tariff across the consumers and regions. In pursuance thereto, the Regulator shall, in consumer interest, determine a uniform tariff (inclusive of quarterly adjustments) for all the State-Owned Distribution companies.
Section 31 (4) of the Act also provides that the Authority shall, [on the basis of uniform tariff application, determine a uniform tariff for public sector licensees, engaged in supply of electric power to consumers, in the consumer’s interest,] on the basis of their consolidated accounts. Accordingly, the Authority has been determining the uniform tariff to be charged from the consumers, including the impact of targeted subsidy and inter DISCO tariff rationalization/cross subsidies, under the Act. The latest uniform tariff in field for Discos was determined by the Authority through its determination dated July 13, 2024 and has been notified on July 14, 2024.
The Federal Government considered the schedules of tariff recommended by NEPRA for each Discos for all categories of consumers dated June 23, 2025, and decided that as per the Policy, the uniform tariff should be made applicable per the provisions of section 31 (4) of the Act.
Accordingly, the uniform tariff, being reflective of economic and social policy of the Federal Government and based on the consolidated revenue requirement approved and determined by the Authority for Discos (owned and controlled by the Federal Government), has been submitted for consideration and approval by the Cabinet on June 28, 2025 and in anticipation of the approval, the same is submitted to the Authority for consideration in terms of section 31 of the Act along with the targeted tariff differential subsidy.
Ends
