ISLAMABAD — Pakistan’s power sector is facing a fresh set of challenges as the number of subsidised electricity consumers has more than doubled in three years, effectively neutralising the impact of a 62-paisa per unit reduction in average tariff that was due from January 1.
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According to a determination issued by the National Electric Power Regulatory Authority (NEPRA) on Monday, the average tariff reduction was absorbed by changes in the sales mix. The regulator noted that subsidised consumers increased from 9.5 million in FY22 to over 20.7 million as of June 2025, with all falling below the monthly consumption threshold of 200 units.
These consumers pay between Rs7.74 and Rs13 per unit, compared to marginal rates of around Rs25 per unit, with tariffs climbing further to as high as Rs47 per unit beyond the subsidy bracket. NEPRA said subsidised consumption surged from 8.5 billion units in FY21 to 19.7 billion units by mid-2025, highlighting a rapid shift in consumption patterns and fiscal burden.
Despite a decline of Rs142 billion in the revenue requirement of ex-Wapda distribution companies for 2026 — mainly due to a reduction in power purchase prices — industrial and commercial users will not see the 62-paisa reduction reflected in their bills. Instead, the government has opted to maintain existing tariffs across categories, with Rs248 billion to be absorbed as subsidy from the federal budget.
Industrial groups criticised the decision, calling it discriminatory and detrimental to export competitiveness. Representatives from the textile sector and the Federation of Pakistan Chambers of Commerce and Industry argued that cross-subsidy tariffs of Rs5–7 per unit were continuing to erode the sector’s regional standing.
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Industrialists claimed that uniform tariffs were being used to mask inefficiencies in distribution companies, pushing additional costs onto productive sectors instead of addressing systemic shortcomings.