Islamabad: In a significant blow to struggling taxpayers, the government has approved a power tariff increase of up to 51%, or Rs7.12 per unit, starting in July. This is the highest percentage increase for lower-income groups.
Around 32.5 million consumers, mainly households, will now have to pay an additional Rs580 billion this fiscal year. This increase is due to past mismanagement and poor energy policies.
Of these 32.5 million consumers, 26 million are low-income households, which will see the most significant percentage increase.
For the first time, the government has introduced fixed monthly charges for residential electricity users, ranging from Rs200 to Rs1,000 per unit. This hike was an essential requirement from the International Monetary Fund (IMF) for Pakistan to qualify for the next bailout package.
The federal cabinet approved the price increase through a summary circulation, confirmed a top government official. A notification for the price hike will be issued soon.
Unlike the usual process where the summary is first reviewed by the Economic Coordination Committee (ECC), this time, the energy ministry directly sends it to the federal cabinet for approval via circulation. This method bypasses open discussion in regular cabinet meetings, impacting 32.6 million consumers without debate.
A similar summary was moved on June 14 but was withdrawn due to IMF objections to the new industrial package. The IMF also rejected the prime minister’s Rs200 billion package that set the industrial electricity price at Rs34.99 per unit. Now, the latest industrial rate is Rs37.83 per unit.
The government raised electricity prices by Rs3.95 to Rs7.12 per unit for residential consumers. The percentage increase ranges from 14.3% to 51%, with the poorest users (1 to 100 units) seeing the highest growth.
According to the Power Division, the average increase is Rs4.55 per unit, raising the national average uniform rate from Rs28.44 to Rs33 per unit.
The minimum rate will now be Rs11.69 per unit and the maximum Rs48.84 per unit, excluding taxes and adjustments.
Prime Minister Shehbaz Sharif’s government approved a 51% increase for protected consumers using 1 to 100 units, raising rates from Rs7.74 to Rs11.69 per unit. This poorest class is the most brutal hit.
A Power Division official noted that protected consumers hadn’t yet seen an increase in the past three years. Traders have begun protesting against the steep rise in their monthly bills following heavy taxation of Rs1.7 trillion.
For those using up to 200 units, the new price for protected consumers is Rs14.16 per unit, a 41% increase. Unprotected consumers using up to 100 units will pay Rs23.59 per unit, a 43.2% increase.
For up to 200 unprotected units, the new rate is Rs30.1 per unit, a 31% increase. For up to 300 units, it’s Rs34.26 per unit, a 26.2% increase. For up to 400 units, it’s Rs39.15 per unit, a 22.2% increase.
The rate for up to 500 units is Rs41.36 per unit, a 17.3% increase. For up to 600 units, it’s Rs42.78 per unit. For up to 700 units, it’s Rs43.92 per unit. For the highest category, it’s Rs48.84 per unit.
For commercial users, the new rate ranges from Rs38.59 to Rs45 per unit, an increase of up to Rs5.84 per unit or 15%. The government has also revised fixed charges for industrial consumers.
The National Electric Power Regulatory Authority (Nepra) contained proposed fixed charges from Rs200 to Rs500 per kilowatt-hour, now approved at Rs400 to Rs1,250 per kilowatt-hour per month.
The cabinet decided that fixed charges would be applied at 25% of the sanctioned load, down from the earlier 50%.
The new industrial tariff is Rs37.83 per unit, the same as last year but Rs2.84 higher than what the prime minister announced, a decision influenced by IMF’s Mission Chief Nathan Porter.
