Uniform tariff: govt formally moves Nepra

ISLAMABAD: The Federal Government has formally approached the National Electric Power Regulatory Authority (Nepra) to implement a uniform electricity tariff across the country, including Karachi, effective from July 1, 2025. This move incorporates subsidies earmarked for the fiscal year 2025-26.

The federal government has reduced subsidy for power sector by 13 per cent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25.

In its motion, the Power Division referred to NEPRA’s determination of tariffs for distribution companies (Discos), announced on June 23, 2025. Under this determination, the national average tariff has been reduced to Rs 34 per kWh for FY 2025-26, down from Rs 35.50 per kWh in FY 2024-25.

PD uncertain on power tariff changes from July 1

The Federal Government’s motion references the National Electricity Policy 2021, approved by the Council of Common Interests (CCI). Clause 5.6.1 of the policy emphasizes that the financial sustainability of the power sector depends on recovering the full cost of service—where feasible—through an efficient tariff structure that ensures liquidity. Clause 5.6.4 adds that financial self-sustainability should ultimately eliminate the need for government subsidies, except for targeted support to lifeline, industrial, or agricultural consumers.

The Power Division further stated that, based on socio-economic objectives, budgetary targets, and NEPRA’s consumer-end tariff recommendations for state-owned Discos, the government intends to continue pursuing a uniform tariff structure across all consumers and regions. Accordingly, NEPRA is requested to determine a uniform tariff—including quarterly adjustments—for all state-owned Discos in the interest of consumers.

Section 31(4) of the NEPRA Act empowers the Authority to determine a uniform tariff for public sector licensees based on their consolidated accounts, ensuring consumer interest. As per this provision, NEPRA has historically included the impact of targeted subsidies and cross-subsidies in uniform tariffs. The most recent such tariff for Discos was determined on July 13, 2024, and notified on July 14, 2024.

After reviewing the tariff schedules recommended by NEPRA on June 23, 2025, for all consumer categories, the Federal Government has decided that a uniform tariff should be applied per Section 31(4) of the NEPRA Act.

The proposed uniform tariff reflects the government’s economic and social policy, and is based on the consolidated revenue requirements approved for Discos owned and controlled by the Federal Government. This proposal was submitted for Cabinet approval on June 28, 2025, and is being forwarded to NEPRA in anticipation of that approval.

The Power Division emphasized that tariff rationalization among Discos is not intended to generate additional federal revenue, but to align with constitutional and policy requirements within the revenue requirements determined for Discos. Once approved, the revised structure will enable NEPRA to determine the final uniform tariff under Section 31(7) of the Act, replacing the existing rates notified on July 14, 2024.

The government also aims to maintain a uniform end-user tariff for K-Electric alongside state-owned Discos, even after any future privatization. This will be achieved through direct and indirect subsidies. Consequently, the variable charge applicable to KE will be modified to align with KE’s revenue requirements as determined by NEPRA, factoring in proposed targeted and cross-subsidies. This proposal, too, has been submitted for Cabinet approval and is being forwarded to NEPRA in anticipation.

In conclusion, the Power Division clarified that this motion has been filed under Sections 7 and 31 of the NEPRA Act, along with Rule 17 of the NEPRA Rules, to seek reconsideration and issuance of a uniform Schedule of Tariffs for Discos, incorporating subsidies and tariff rationalization.

A separate motion has also been filed for KE under Sections 7, 31(4), and 31(7), to issue a modified variable charge and maintain national uniformity in consumer-end tariffs.

NEPRA is scheduled to hold a public hearing on July 1, 2025 to put a stamp of approval on the Federal Government’s motion for uniform tariffs across all regions, including K-Electric’s service territory.

Copyright Business Recorder, 2025