Nepra terms revenue-based load-shedding illegal, DISCOs warn of Rs500 billion impact

The National Electric Power Regulatory Authority (Nepra) has declared revenue-based electricity load-shedding illegal, stating that the practice has no legal basis. The issue came under discussion during a public hearing held to consider a fuel cost adjustment of up to Rs0.27 per unit for March 2026.

Officials said that, following directives from the Power Division, distribution companies have been carrying out additional outages in areas with low bill recovery to limit revenue losses. However, the regulator questioned the legality of such measures.

Representatives of power companies warned that discontinuing revenue-based load-shedding could increase circular debt by over Rs500 billion, citing financial pressures on the sector.

Data presented at the hearing showed that the average cost of electricity stood at Rs8.26 per unit in March, compared to a reference tariff of Rs7.99 per unit.

Circular debt was reported at Rs1,837 billion as of February 2026, before declining to Rs1,798 billion in March. Officials said the reduction was linked to timing adjustments, with projections indicating zero net addition to circular debt by the end of the fiscal year under the Circular Debt Management Plan.

The hearing was also informed that electricity demand rose by 6.38 per cent in March, with peak generation reaching 18,551 megawatts. The number of protected consumers increased to around 22 million from 11 to 12 million.

Hydropower generation is expected to reach around 5,500 megawatts in May 2026 amid forecasts of a heatwave during the summer season.

The government has also procured spot liquefied natural gas at around $23 per million British thermal units, which is expected to translate into a per-unit cost of Rs42.

Officials said distribution companies have reduced losses to 15.3 per cent from 15.7 per cent, while bill recovery improved to 99 per cent from 97 per cent. Financial losses declined to Rs176 billion during July–March 2025-26 from Rs221 billion in the same period last year.

Industrial representatives at the hearing welcomed increased supply of locally produced gas to power plants but raised concerns about the allocation of gas previously curtailed due to surplus LNG imports.