• Sanctioned load to determine monthly bill regardless of use
• Industry freed from cross-subsidy, govt tells hearing
ISLAMABAD: The government on Tuesday reluctantly conceded that the industrial sector had, for the first time, been fully freed from cross-subsidy to compete globally, as it disclosed a higher-than-previously known financial impact of the newly imposed fixed charges on residential electricity consumers.
At an almost one-way public hearing on Rs4.04 per unit average cut in power rates for industrial consumers and imposition of fixed charges on residential consumers, industrial consumers, power division and the National Electric Power Regulatory Authority (Nepra) were all praise for each other for a long overdue “great move” and “first step in the right direction”.
No representative appeared on behalf of more than 28.5 million residential consumers who will be subject to the fixed charges.
The power division team, led by Additional Secretary Mehfooz Bhatti and comprising the chief financial officer of Power Planning and Management Company (PPMC), Naveed Qaiser, reported that fixed charges would be collected from residential consumers at the rate of Rs200-675 per kilowatt a month and not Rs200-675 per connection per month.
This means the charge will be linked to the sanctioned load regardless of consumption. A consumer with a 2kW sanctioned load would pay Rs400 per month at a Rs200 per kW rate, while a 5kW consumer would pay Rs2,500 per month at Rs500 per kW. A 6kW sanctioned load would attract Rs4,050 per month at Rs675 per kW.
Mr Qaiser said it was also for the first time that a two-part tariff would be charged to consumers to cater for the Rs2.56 trillion annual fixed cost of capacity. While the move reduces about Rs101bn cross-subsidy from industrial consumers, the recovery of fixed charge would increase by Rs132bn, to Rs355bn (10 per cent) from Rs223bn (7pc) at present, excluding 18pc GST and other surcharges and duties.
He said that about Rs31bn to be collected through fixed charges would be used to reduce the variable tariff of consumers using more than 300 units per month to minimise their incentive to move away from the national grid, while the remaining Rs101bn would be used to ease the industrial burden.
Mr Bhatti said the industrial tariff would now come down to around 11.50 cents per unit from around 13, although it was still higher than regional competitors, but involved no cross-subsidy.
Separately, the financial advisory firm Optimus Capital Management worked out the average power tariff for protected consumers in the first 100-unit slab, increasing by 76pc or Rs8 per unit due to the fixed charge. The average cost for 101-200 units in the protected category would see an increase of Rs4 per unit (or 31pc).
For the non-protected category, Optimus estimated a 74pc increase — about Rs16.50 per unit — for the first 100 units, followed by a 21pc increase (about Rs6 per unit) for the 101-200 unit slab.
It said the net average tariff, including fixed charges, would rise for all domestic consumers, including by 13pc for 201-300 units, 6.5pc for 301-400 units, 5.8pc for 401-600 units per month and about 5pc for consumption above 600 units. The only net reduction — about 7pc — would apply to time-of-use consumers with sanctioned load above 5kW.
Published in Dawn, February 11th, 2026
