ISLAMABAD: The Power Division has moved Nepra for approval of uniform tariff for Discos and KE after incorporation of Rs 249 billion subsidy under the Multi Year Tariff Regime determined on January 7, 2026 and the decision of January 12, 2026, as subsequently notified by the federal government on January 13, 2026.
Nepra will conduct a public hearing on February 10, 2026 to put its stamp the newly proposed uniform tariff across the country.
The National Electricity Policy, 2021 approved by the Council of Common Interests provides under Clause 5.6.1 that ‘financial sustainability of the sector is premised on the recovery of full cost of service, to the extent feasible, through an efficient tariff structure, which ensures sufficient liquidity in the sector’ and vide Clause 5.6.4 it states that ‘in due course, financial self-sustainability will eliminate the need for Government subsidies (except for any subsidies for lifeline, industry or agriculture consumers, as per prevailing Government considerations).’ It further states that in view of various parameters, including (a) the socio-economic objectives; (b) budgetary targets in field; and (c) recommendations of the Regulator with respect to consumer-end tariff for each State-Owned Distribution company, the Government may continue to propose uniform tariff across the consumers and regions. In pursuance thereto, the Regulator shall, in consumer interest, determine a uniform tariff (inclusive of quarterly adjustments) for all the State-Owned Distribution companies.
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In view of the existing structural misalignment between the determined revenue requirement of the power sector where a substantial portion comprises of fixed costs and the predominantly volumetric recovery mechanism under the current tariff, coupled with the significant expansion of off-grid solar, it has become necessary to rationalize the tariff structure. The present volumetric tariff framework has placed a disproportionate recovery burden on other consumers, particularly, leading to increased cross-subsidization and migration to alternative energy solutions.
Accordingly, while remaining within the determined revenue requirement and approved subsidy limits, a recalibration of fixed and variable charges is proposed to ensure equitable cost recovery and long-term financial sustainability of the grid. Accordingly, the fixed charges for all domestic consumers, except è consumers is introduced/revised.
In order to better reflect the underlying cost structure and fixed cost recovery of the power sector consolidated revenue requirement approved and determined by the Authority for Discos (owned and controlled by the Federal Government), the uniform tariff has been approved by the Cabinet on February 4, 2026 and the same is submitted to the Authority for consideration in terms of the provisions of the Act, without changing the targeted tariff differential subsidy of Rs. 249 billion, along with the policy guidelines for revision of rates and application of fixed charges, to be incorporated in Nepra-determined schedule of tariff and issuance of tariff after adjusting variable rates in line with already determined revenue requirement of Discos .
Further, in accordance with the policy, the government may maintain a uniform tariff for KE and State-Owned Distribution
Companies (even after privatization) through incorporation of direct/indirect subsidies.
Accordingly, KE applicable uniform tariff is required to be modified, which will also be consistent with the proposed uniform national tariff of Discos. The same has also been approved by the Cabinet and the same has been submitted to the Authority for consideration in terms of the provisions of the Act.
Copyright Business Recorder, 2026
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