NEPRA proposes a Rs25 per unit reduction in electricity tariffs

Islamabad – The National Electric Power Regulatory Authority (NEPRA) has submitted a comprehensive plan to the government aimed at reducing electricity prices by Rs25 per unit. The proposal, outlined in a document released on Thursday, suggests that revising per-unit capacity payments and adjusting surcharges could lead to significant tariff reductions.

NEPRA’s plan includes a detailed breakdown of the current electricity pricing structure. According to the authority, of the current cost of Rs45.06 per unit, Rs17.01 per unit is dedicated to capacity charges. Additionally, Rs15.28 per unit are taxes and surcharges, and distribution companies add Rs3.10 per unit as a distribution margin.

The regulator also noted that one paisa per unit is collected for maintenance, revenue generation, and adjustments for the next year, while transmission charges add another Rs1.37 per unit to the total.

NEPRA revealed that the average production cost of electricity is Rs7.62 per unit, and according to its proposed formula, abolishing the surcharges of Rs7.52 and adjusting 67 paise would bring the price down by Rs25.20 per unit. This would reduce the current tariff of Rs45.06 per unit to Rs20.04 per unit.

In addition, NEPRA’s recently released State of Industry Report 2024 urged the government to review the Rs15.28 per unit taxes on electricity. The report also pointed out the underutilisation of power generation capacity as a significant challenge facing the sector. While the total installed power generation capacity reached 45,888 MW by the end of fiscal year 2023-24, the average annual utilisation rate during this period was only 33.88%.

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