June 22, 2024
The National Electric Power Regulatory Authority (NEPRA) has raised the power tariff by Rs. 25 per unit. This increase will take effect from the 1st of July, 2024, and is expected to guarantee Rs. 8 trillion in funding for the ten ex-Wapda electricity distribution companies (Discos) in the fiscal year 2024-25.
The new tariff will go further to give Discos Rs485 billion additional for revenue, hence bolstering the government’s bargaining power in negotiation for an IMF bailout in July.
The average national base tariff has been fixed at Rs35 nationally. 40 per unit for the subsequent fiscal year from Rs27. It may be at an average price of $78 per unit in the current year.
It is because the rupee has devalued, there is high inflation and a very high interest rate on loans.The increase in power rates will translate to the Disco’s consumers bearing an estimated cost of around Rs 580 billion.
It is forecasted that the average national tariff will be much higher for the consumer than the industrial sector, which has been exempted from the Rs10—69 per unit cut.
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The power division will submit a second tariff table to NEPRA for subsidy punching of different consumer categories and tariff slabs before a formal notification from July 1.
Based on the PPP calculation made by NEPRA for Discos in 2024-25, it would cost Rs1,161.257 billion for fuel and variable O&M costs and rupees two thousand hundred and sixteen for fixed O&M costs—17 billion as fixed charges and $ 25 billion as capacity charges.
The capacity charges are about 65 percent of the total reflected PPP, whereas energy cost stands at 35 percent. The national average power purchase price is computed at Rs27 per unit.
The escalation of power tariffs is now becoming an inevitable measure to make the energy sector sustainable and regulate state-owned enterprises. It is also an important condition that the upcoming IMF bailout will require further progress in implementing structural changes.
