The federal government of Pakistan has announced a significant increase in electricity prices by Rs 1.74 per unit, a move that will affect millions of consumers across the country. This adjustment, effective immediately, applies to all electricity users, including those served by Distribution Companies (DISCOs) and K-Electric. The new rates, introduced as part of a quarterly adjustment, are set to be in effect for the months of September, October, and November.
According to official sources, this price hike is expected to impose an additional financial burden of Rs 43.23 billion on consumers. The National Electric Power Regulatory Authority (NEPRA) approved this adjustment on September 6, in response to rising costs and declining power demand.
Soaring Tariffs Amid Economic Crisis
The surge in electricity prices comes amid a prolonged economic crisis that has severely impacted power consumption in Pakistan. In 2023, power demand dropped by nearly one-sixth, and a further decline is anticipated in 2024, marking the first time in 16 years that annual electricity use may fall consecutively. This trend is attributed to soaring energy costs that have forced households and businesses to cut back on consumption, leading to excess capacity that still needs to be financed.
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To cover the fixed costs and capacity payments, the government has incorporated these expenses into consumer bills, resulting in widespread protests from both domestic users and industrial associations. “The current rates are not affordable for domestic or commercial consumers,” admitted Awais Leghari, Federal Minister of the Power Division. He added that the high tariffs are hurting economic growth by making Pakistan’s exports less competitive in the global market.
Additional Burdens for Karachi Consumers
Consumers in Karachi, served by K-Electric, are expected to face further price hikes. Following NEPRA’s approval of a quarterly adjustment, K-Electric sought an additional increase of Rs 3.09 per unit under the fuel charge adjustment (FCA) for July, which, if approved, will be reflected in November’s electricity bills. This proposed hike could add over Rs 10 billion in financial burden on the city’s residents.
Prior to this, NEPRA approved K-Electric’s request for monthly fuel charge adjustments for May and June, increasing rates by Rs 2.59 and Rs 3.17 per unit, respectively. These adjustments have already added a burden of over Rs 6.2 billion on Karachi consumers.
Efforts to Reduce Dependence on Expensive Fuels
To mitigate the impact of rising electricity costs, the government is attempting to reduce reliance on furnace oil for power generation and boost natural gas-fired electricity production. However, challenges persist, including frequent power cuts, especially in rural areas, due to grid issues, delays in importing fuel, and hard currency shortages. Despite these hurdles, the frequency of such outages has decreased in recent months.
As Pakistan navigates its ongoing energy and economic crises, the new electricity tariff adjustments highlight the urgent need for sustainable solutions that balance consumer affordability with the country’s energy needs.