ISLAMABAD: The country’s industry has opposed any increase in base tariffs of power Distribution Companies (Discos) as higher tariff is hitting industry, which, in turn, is hurting the country’s exports badly.
These comments were offered at a public hearing on change in tariff rebasing of three Discos – IESCO, FESCO and LESCO on interim basis from financial year to current calendar year by including last six months (July-December 2026) by adjusting their revenue requirements.
Nepra determined the annual tariff adjustment/indexation of IESCO, FESCO and LESCO for FY 2025-26 (July-June) on June 23, 2025.
NEPRA’s revised tariff: a threat to Karachi’s industries and SMEs?
Subsequently Power Division conveyed approval of the Federal Cabinet regarding the revision of the annual rebasing and tariff determination schedule, whereby annual rebasing shall now take effect from 1st January of each year.
Power Division, in its letter of October 16, 2025 also advised all DISCOs to approach NEPRA for issuance of tariff determinations in accordance with revised annual rebasing timelines for consumer-end tariff.
Nepra argued that since change in rebasing year will impact on the consumers, it decided to hold public hearing to determine consumer-end tariff on interim basis for period from July 1, 2026, to December 31, 2026.
During the hearing, the three Discos sought alteration in their Net Distribution Margins (NDMs) to adjust increase in salaries from next fiscal year, post retire benefits, repaid maintenance, and transportation. The total determined O&M cost for FY 2025-26 of IESCO was Rs 32.958 billion at a rate of Rs 2.83/kWh.
However, the Discos projected O&M cost of Rs 20.108 billion for the period from July 1, 2206 to December 2026 at Rs 3.22/kWh, with an increase of Paisa 39/kWh. However, after inclusion of depreciation, Return on Assets (RoAs) and other income, IESCO has projected its NDM of Rs 26.307 billion at Rs 4.22/kWh during July1 to December 31, 2026 (six months of next calendar year from previous determined rate of Rs 3.94/kWh). This projection is based on sale of 6,238 Gwh of electricity during six months.
Faisalabad Electric Supply Company (FESCO) projected NDM of Rs 32.132 billion during the second half of current year from previous determined amount of Rs 27.430 billion, indicating an increase of 1.17/kWh. With increase in NDM of Rs 4.704 billion and projected sale of 8.043 GWh during the six-month interim period, projected NDM will increase to Rs 3.99/kWh from projected rate of Rs 3.57/kWh.
Lahore Electric Supply Company (LESCO) sought approval of Net Distribution Margin of 70.912 billion from January to December 2026 on the projection of sale of 23,556 GWh of electricity at a rate of 3.01/kWh from previously project rate of Rs 3.05/kWh.
LESCO has requested Nepra to allow: (i) NDM of Rs 37.937 billion as interim tariff for July-December 2026 for rebasing of tariff;(ii) inclusion of Rs 23.973 billion as impact of Motion for Leave pending with Nepra; and (iii) Prior Year Adjustment (PYA) of Rs 24.991 billion.
During the hearing, Rehan Jawed took a strong position stating that NEPRA should summon Power Division’s officials and tell them that sale of electricity is on the decline, it should reduce tariff so that sale increases and Discos avoid increase in revenue which will further hike electricity prices.
He further contended that with the current speed of increase in electricity prices, electricity rate for industry will touch Rs 55/kWh which will not be affordable for industry. He said, electricity tariff has already reached Cents 13.25/kWh which is not feasible for the industry.
“Electricity consumption will not increase until its rates are reduced. Exports are on the decline due to higher costs,” he added.
Another industrialist, Aamir Sheikh concurred and suggested that increase in tariff demanded by the Discos for interim period of six months of 2026, should not be allowed as it will hit industry. He also mentioned decline in exports during the last several months.
“Export industry is very worried that since dollar exchange rate is almost fixed, all these increases are further increasing cost in dollar terms. Exports are already badly suffering and increases in cost of production negatively impact on exports,” he added.
The government has diverted RLNG vessels and the cost of electricity should in fact fall as RLNG is the most expensive fuel and was only used because of take or pay contracts. And yet electricity rates have increased 20% in the last 6 months during which time USD has revalued instead of devalued, he further stated.
On a suggestion from one of the participants, Nepra decided to work-out a mechanism for defective meters to be inspected by a third party instead of the relevant Discos.
Copyright Business Recorder, 2025