Nepra Cuts Electricity Tariff by Rs1.49 per Unit for FY 2025-26, Offers Relief to Consumers
ISLAMABAD – In a move expected to bring much-needed relief to households and industries alike, the National Electric Power Regulatory Authority (Nepra) has announced a reduction in the base electricity tariff by Rs1.49 per unit for the fiscal year 2025–26. The revised tariff now stands at Rs34.01/unit, reflecting a 4.2% decrease from the current Rs35.50/unit.
Key Drivers Behind the Tariff Reduction
The decrease in the power tariff is attributed to:
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Lower capacity payments, secured through fresh agreements with Independent Power Producers (IPPs)
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Falling international energy prices
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A projected 2.8% rise in electricity demand for the upcoming year
Nepra has submitted its rebasing decision to the federal government for final approval and implementation of a uniform national tariff.
Financial Overview for FY26
For FY2025–26, Nepra has approved a revenue requirement of Rs3.52 trillion for the ex-Wapda distribution companies (XWDiscos). This includes:
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Rs3.07 trillion for power purchase price (PPP)
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Rs454 billion for distribution margins and system losses
In contrast, the government had increased the base tariff by Rs5.72 per unit (19.2%) to Rs35.50/unit in FY2024–25, making the current cut a welcome development for electricity consumers.
Industrial Shift and Grid Impact
Nepra credits the improved macroeconomic indicators and a significant shift of captive industrial users back to the national grid as factors helping ease pricing pressures. However, structural challenges persist.
One major concern is the underutilization of imported coal plants, which are expected to operate at just 24% capacity in FY26. Despite low usage, they will cost Rs61.43/unit due to high dollar-based returns on equity (27.45%).
Additionally, excess re-gasified liquefied natural gas (RLNG)—resulting from reduced industrial consumption—has reached 450 MMCFD, leading to Rs300 billion in diversion costs as it is redirected to the residential sector.
Breakdown of Power Purchase Costs
Of the total power purchase price:
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Rs1.94 trillion (63%) is allocated for capacity charges
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Rs1.13 trillion covers fuel and variable O&M costs
This translates to:
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Rs6,484 per unit per month in capacity charges, based on a projected monthly demand of 24,943 MW
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An average PPP of Rs26.34/unit for XWDiscos (pre-transmission losses), with:
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Rs16.67/unit in capacity charges
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Rs9.67/unit in energy costs
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When including K-Electric, the national average PPP is estimated at Rs25.98/unit.
Generation and Transmission Outlook
Despite lower prices, energy supply issues remain. Key updates include:
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Hydropower generation is expected to decline 18% year-on-year due to lower water availability, increasing reliance on costlier thermal sources
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A new 900MW transmission line, connecting southern and northern regions, is expected to be completed by August 2025, which could help ease grid bottlenecks
The Need for Long-Term Reforms
While the tariff reduction offers immediate economic relief, experts emphasize the need for structural reforms in the energy sector to ensure long-term sustainability and efficiency.
