Good news for electricity consumers across Pakistan: the National Electric Power Regulatory Authority (NEPRA) has announced a drop in the base tariff for FY 2025–26, from Rs 35.50 to Rs 34.01 per unit. This reprieve comes at a time of inflationary pressure, and both households and industries stand to benefit.

What’s Behind the Reduction?

Several factors contributed to the tariff decrease:

• Renegotiated capacity payments with Independent Power Producers (IPPs), trimming outdated higher rates.

• Falling fuel costs, including both global prices and domestic rates.

• A small uptick in electricity demand, projected at 2.8% for FY 2025–26

Tariff Structure Snapshot

NEPRA approved a total revenue requirement of Rs 3.52 trillion for ex-WAPDA Distribution Companies (XWDiscos)—Rs 3.07 trillion for Power Purchase Price (PPP) and Rs 454 billion for distribution margins and losses.

Of the PPP (~Rs 3.07 trillion):

• Capacity charges: ~63%, or Rs 16.67/unit

• Energy & O&M costs: Rs 9.67/unit Total ex-WAPDA PPP = Rs 26.34/unit

When including K-Electric, the national average PPP slightly lowers to Rs 25.98/unit, marking a modest 3.8% decrease from last year’s Rs 27/unit.

Imported Coal Plants Still Expensive

Interestingly, imported coal plants will continue to operate at low capacity (about 24%) but incur high costs, around Rs 61.43/unit due to dollar-linked returns of 27.45%. This is more than double the national average, so they remain a costly element for Pakistan’s energy mix.

What This Means for You

• Households: Lower electricity rate means modest savings ranging from Rs 1–2 per unit, great relief for monthly billing.
• Industries: Every unit saved boosts profitability and eases overhead costs.

• Energy Policy: The tariff cut signals NEPRA’s push toward supply-chain reform and fiscal balance, encouraging more efficient energy production.

On the Road Ahead

This tariff reduction isn’t just a one-off concession, it’s part of a larger effort to restructure energy costs, renegotiate contracts, and move toward efficient, clean energy. But imported coal’s high cost remains a hurdle.

Future focus needs to include:

• Phasing out expensive coal contracts

• Boosting renewable energy

• Optimizing usage of hydel and natural gas

NEPRA’s decision is a step forward, but sustainable energy planning is essential for long-term stability and affordability.