The reduction of Rs 4.4 per unit in electricity tariff for industries was announced on 30 January by Prime Minister Shehbaz Sharif as a relief measure aimed at supporting industrial growth.
He remarked that if it were entirely within his control, he would have reduced the tariff by an additional Rs 10 per unit. However, the source of funding for this relief was not disclosed at the time of the announcement. It later emerged during a public hearing held on 10 February by National Electric Power Regulatory Authority (Nepra) that the Power Division intended to recover Rs 101 billion from 28.5 million residential consumers through fixed charges in their monthly electricity bills. This revelation suggested that the financial burden of the industrial relief would effectively be shifted to domestic consumers.
The public hearing was conducted under the subject of tariff rationalization, which primarily concerned industrial stakeholders. As a result, representatives from the industrial sector attended and participated. However, the notice did not clearly indicate that the proposed adjustments would directly impact residential consumers. Had such details been explicitly stated, it is likely that a sizeable number of domestic consumers would have taken part in the proceedings. Subsequently, the Authority issued a notification the following day, transferring the financial burden to residential consumers without notable resistance. The situation raises concerns regarding transparency in decision-making and whether all affected stakeholders were adequately informed and given an opportunity to participate in the consultation process.
Accordingly, the government has imposed fixed monthly charges ranging from Rs 200 to Rs 675 on over 28.5 million residential electricity consumers to generate more than Rs101 billion plus 18 percent GST. Under the plan, Rs200 fixed charge will apply to 10 million protected consumers using up to 100 units, while a Rs300 will be imposed on over 6 million protected-category consumers using up to 200 units per month. Similarly, fixed charge of Rs 350 will be collected from 3 million consumers using 201–300 units, whereas one million in same category consuming 301–400 units will pay Rs 400 per month and those consuming 401 to 500 units will be subject to a fixed charge of Rs 500 per month. Though previously protected consumers were exempt from the fixed charges, but now government is of the view that together with everyone, poor and most vulnerable people must also join hands to help the industry. On the other hand, government employees will not be subject to these fixed charges owing to grant of free units based on their respective pay scales.
Additionally, as per the existing practice of charging the higher tariff on account of consumption of one extra unit, here too, the authority has decided that in case the 100-unit threshold exceeds even once within six months by one unit, the consumer will pay the higher fixed charge of upper category. However, the bigger impact of this swift decision will be on TOU customers currently paying Rs 1000 per month of fixed charge who, under the new plan, will pay the fixed charge based on sanctioned load at 50 percent of Rs 675 per kw or MDI, whichever is higher. Hence, a consumer having a sanctioned load of 10kw will now pay a monthly fixed charge of Rs 3,375. Similarly, those having 40kw of sanctioned load will be burdened with additional payment of Rs. 12,500 per month of fixed charge. Moreover, in order to generate additional revenue, for the first time NEPRA has introduced a concept of Maximum Demand Indicator (MDI) to the Residential Customer which, in the past, has only been applicable to industrial consumers. Thus, if consumption exceeds the sanctioned load during the interval of 15 to 30 minutes in a given billing cycle, consumers will pay even higher fixed charges.
It may be noted that currently Nepra is operating with three members since positions of Sindh and Baluchistan are vacant and to complete the quorum for a public hearing on Prosumer Regulations, member from Punjab after completion of a four-year term as a member Legal was reappointed as a member Finance and Tariff on the morning of 6th February 2025.
It may also be recalled that the Ministry of Energy has proposed amendment in the NEPRA Act and once approved, it will most likely function as a department under the Power Division. Experts feel that till the Authority is autonomous, its members should not have swiftly complied on pre-planned move of Power Division for neither implementation of Prosumer Regulations nor of unjustified fixed charges particularly linking those with sanctioned load, making it a scheme similar to capacity payment even if one is using lesser units. Regrettably, while passing on the extra burden to millions of consumers, Nepra did not consider that these consumers are already contributing Rs 3.23 per unit plus 18 percent GST as PHL towards circular debit, which continues to increase due to wrong decisions of the officials of Power Division.
Having faced criticism and harsh remarks by the members of coalition in the parliament, Prime Minister directed the officials of Power Division, who had sponsored the Prosumer Regulations, to file an appeal against the decision of the Authority so as to protect the interest of 37 million non-solar consumers and to honour the contracts of existing solar installers. According to the rules of NEPRA, against any decision of the Authority first a review petition is required to be filed, followed by an appeal before the Appellate Tribunal.
Similar to the two vacancies of the members in NEPRA, since last one year Appellate Tribunal is non-existent. Despite being aware of it and instead of filing a review petition, Power Division has submitted an appeal to the secretariat of Tribunal which will not be taken up in the near future and in the meantime, Discos will implement the Regulations.
Concerns over the imposition of fixed charges on 28.5 million residential consumers, including protected consumers, are likely to intensify, particularly because the charges are being linked to sanctioned load rather than actual consumption. It should be noted that this mechanism disproportionately affects lower- and middle-income households, for whom fixed costs represent a heavier burden regardless of usage patterns. It is hoped that members of parliament may raise the issue in legislative forums. Political parties such as Jamaat-e-Islami, which has been vocal in opposing high electricity tariffs, along with consumer rights associations across the country, may move to file a review petition, challenging the decision.
At the same time, public attention has turned toward the International Monetary Fund (IMF) amid reports that it is discussing proposed electricity tariff revisions with the Pakistan authorities so as the burden of the revisions should not fall on middle- and lower-income households. For millions of consumers, this development offers cautious hope that external oversight may discourage policies that shift the financial burden of industrial relief onto residential consumers. Ultimately, the debate underscores broader questions about tariff design, transparency in regulatory proceedings, and the equitable distribution of energy-sector adjustments across different segments of society.
Copyright Business Recorder, 2026
The writer is a former MD of the Karachi Stock Exchange, Chairman of CDC, President of OICC&I and one a founder of Group “Save the Planet via Green Energy”
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