fairwheelsThe National Electric Power Regulatory Authority (NEPRA) has officially notified a significant increase in electricity tariffs for the first quarter of the fiscal year 2025 (FY25), following directives from the International Monetary Fund (IMF). The tariff hike aims to address the revenue shortfall, mounting circular debt, and rising power generation costs, which have reached alarming levels due to a combination of high fuel prices and a weakening currency.
Details of the Tariff Hike
Effective from July 2024, the base tariff will increase by an average of Rs5.72 per unit across various consumer categories. Residential users consuming over 300 units per month will see increases ranging from Rs3.63 to Rs7.12 per unit, depending on usage tiers. Commercial consumers face an even steeper rise of Rs8.04 per unit, while the agricultural sector will experience a hike of Rs6.62 per unit. Industrial consumers will remain exempt from further increases at this stage.
New Fixed Charges
NEPRA has also introduced new fixed charges for high-usage consumers. Households consuming more than 300 units will now pay monthly fixed charges ranging from Rs200 to Rs1,000, while industrial and commercial sectors face increases of up to 184%, with charges reaching Rs1,250 per month for some categories.
Exemptions for Lower-Consumption Users
To cushion the impact on lower-income households, NEPRA has exempted users consuming up to 200 units per month from the tariff hike for the initial three months (July to September 2024). Lifeline and protected consumers will benefit from minimal increases during this period, with tariffs for this group remaining steady at Rs3.95 to Rs10.06 per unit for certain usage levels.
Economic and Policy Context
This tariff adjustment is part of a broader strategy to comply with IMF requirements for fiscal discipline and reducing the circular debt, which currently exceeds Rs2.55 trillion. The hike reflects adjustments to the Power Purchase Price (PPP), which rose by Rs4.86 per unit, and a revised total revenue requirement of Rs3.768 trillion for FY25.
Broader Implications
The increase is expected to exacerbate economic challenges for businesses and consumers, particularly amid ongoing inflation and currency depreciation. Industrial energy consumption has already declined by 30%, and further declines are anticipated due to rising costs. Experts warn that this could lead to reduced productivity and economic stagnation in key sectors.
Keywords:
- NEPRA electricity tariff hike
- FY25 electricity rates Pakistan
- Power tariff adjustment Pakistan 2024
- IMF-driven electricity tariff increase
- Circular debt reduction in Pakistan
- Fixed charges electricity tariff Pakistan
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