NEPRA proposes Rs25 per unit reduction in electricity tariffs

The National Electric Power Regulatory Authority (NEPRA) has proposed a plan to reduce electricity tariffs by Rs25 per unit, bringing the cost down from Rs45.06 to Rs20.04 per unit if implemented. 

According to the report, the plan, submitted to the government, suggests revising capacity payments and eliminating surcharges to achieve this reduction.

NEPRA highlighted that of the current Rs45.06 per unit tariff, Rs17.01 accounts for capacity payments, Rs15.28 for taxes and surcharges, and Rs3.10 as distribution margins. 

Additional components include Rs1.37 for transmission charges and one paisa for maintenance and future revenue adjustments. In contrast, the average net production cost of electricity stands at Rs7.62 per unit.

The proposed formula recommends abolishing Rs7.52 per unit in surcharges and adjusting 67 paisa, which NEPRA says could result in a significant tariff reduction of Rs25.20 per unit.

This proposal follows NEPRA’s recent State of Industry Report 2024, which called on the government to reassess the Rs15.28 per unit taxes on electricity. 

The report also emphasized the issue of underutilized generation capacity, noting that while the installed capacity by June 2024 reached 45,888MW, the average annual utilization was only 33.88%.

The regulator’s recommendations aim to address inefficiencies in the power sector, optimize capacity utilization, and alleviate the financial burden on consumers. The government is expected to review the proposals for potential implementation.