NEPRA Raises Special Industrial Electricity Rate to Rs25.30 Per Unit Despite Dissent

Pakistan’s National Electric Power Regulatory Authority (NEPRA) has provisionally increased the electricity rate under a special incremental consumption package for eligible industrial and private agricultural consumers from Rs22.98 to Rs25.30 per unit, effective from the November 2026 billing month.

The decision, announced on November 6, follows a review of the electricity incentive package introduced to encourage businesses to increase their consumption from the national grid. However, the revised rate was approved despite objections from two NEPRA members, who argued that the proposed figure was not supported by a sufficiently reliable assessment of the actual cost of supplying additional electricity.

The disagreement exposed wider concerns about electricity generation costs, the financial burden on consumers who do not benefit from the package, and delays in the government’s submission of the required technical information.

In a separate decision, NEPRA also approved an additional Rs2.37 per unit fuel cost adjustment (FCA) for November electricity bills to recover approximately Rs25 billion. This adjustment affects consumers more broadly, including those served by K-Electric and other distribution companies.

Importantly, the Rs25.30 rate is not a new standard electricity tariff for all factories. It applies to eligible incremental consumption under the special package. The distinction is essential for industrial businesses calculating their electricity expenses.

What Has NEPRA Decided?

NEPRA approved a provisional increase in the rate under the Incremental Consumption Package (ICP), which was originally set at Rs22.98 per kilowatt-hour.

The revised rate is Rs25.30 per kWh and applies from the November 2026 billing month. It will remain in place for subsequent billing months until the regulator makes another decision after receiving and examining the comprehensive technical review it has requested.

The increase amounts to Rs2.32 per unit, equivalent to approximately 10.1%.

The decision covers eligible industrial and private agricultural electricity consumers of ex-WAPDA distribution companies and K-Electric.

NEPRA clarified that the revised rate is provisional rather than a final determination of the actual marginal cost of supplying incremental electricity.

The regulator also decided not to suspend the package immediately, despite calls from two members to temporarily halt it until the required cost assessment becomes available.

What Is the Incremental Consumption Package?

The Incremental Consumption Package was introduced in December 2025 to encourage industrial and private agricultural consumers to purchase additional electricity from the national grid.

Under the arrangement, eligible consumers receive a special rate on electricity consumed above a specified reference level.

The reference consumption is based on the period from December 2023 to November 2024. Electricity consumed above the applicable reference level may qualify for the package, subject to its conditions.

The programme was approved for three years and was designed to encourage greater use of grid electricity.

Its broader objectives include:

• Encouraging factories to increase production using grid electricity.
• Bringing additional electricity demand back to the national power system.
• Improving utilisation of existing power generation capacity.
• Reducing the financial impact of declining electricity sales.
• Making grid electricity more competitive with alternative energy sources.

The government argued that encouraging additional electricity consumption could help improve the utilisation of power plants and other infrastructure whose fixed costs must be recovered through electricity sales.

However, the package also raised concerns about whether the discounted rate accurately reflected the cost of generating and delivering additional electricity.

Why Has NEPRA Increased the Rate?

The main reason behind the revision is the growing difference between the rate charged under the package and the estimated cost of supplying incremental electricity.

The original rate of Rs22.98 per unit was established when the programme was introduced. However, changes in fuel prices, electricity generation patterns and the availability of different energy sources created concerns about whether the original rate remained financially sustainable.

The Ministry of Energy’s Power Division proposed increasing the rate to Rs25.30 per unit using updated fuel-price assumptions.

Its calculations retained the generation mix originally assumed when the package was designed, while updating relevant fuel prices.

However, NEPRA identified limitations in this approach. The regulator said actual generation dispatch patterns, fuel availability and changing operating conditions needed to be considered before the actual marginal cost could be established.

The authority therefore approved Rs25.30 as an interim rate while directing the government and relevant power-sector entities to provide a more comprehensive assessment.

The decision does not establish that Rs25.30 is the definitive cost of supplying incremental electricity.

Why Did Two NEPRA Members Oppose the Decision?

NEPRA’s decision was divided, with two members supporting a different approach from the chairman and the member responsible for legal matters.

Member Tariff Amina Ahmed and Member Development Maqsood Anwar Khan jointly opposed the proposed revision.

They argued that the rate of Rs25.30 per unit was not adequately supported by evidence and that NEPRA’s own calculations indicated a marginal cost of approximately Rs31.83 per unit.

They also questioned whether the package should continue without a reliable assessment of the actual cost of incremental electricity.

Their position was that the programme should be temporarily suspended until the Ministry of Energy provided the required technical information.

The two members raised concerns that continuing the package at a rate below the actual cost could shift part of the financial burden onto consumers who do not benefit from the special arrangement.

They also argued that other consumers should not have to bear the cost of delays in completing the review, which had been required several months earlier.

What Was the Chairman’s Position?

NEPRA Chairman Waseem Mukhtar acknowledged that the dissenting members had raised issues requiring serious consideration.

However, he did not support immediately suspending the package.

He argued that the Ministry of Energy should be given another opportunity to provide the missing information and complete the review.

The authority was divided 2-2. The chairman then exercised his statutory casting vote in favour of the first opinion, allowing the provisional rate of Rs25.30 per unit to be approved.

Consequently, the package will continue at the revised rate while the regulator awaits the comprehensive assessment.

Why Did NEPRA Calculate the Marginal Cost at Rs31.83?

One of the most significant aspects of the decision is the difference between the proposed Rs25.30 rate and the Rs31.83 marginal cost calculated by NEPRA’s tariff team.

The regulator’s technical assessment estimated the weighted average marginal cost for the review period, adjusted for applicable losses, at approximately Rs31.83 per unit.

However, the official decision also acknowledged that this calculation had limitations and could potentially overstate the actual marginal cost attributable specifically to incremental consumption.

Some of the factors requiring further examination included:

• Electricity generation dispatched because of transmission or operational constraints.
• RLNG generation operating under must-purchase obligations.
• Subsequent approvals or revisions to RLNG prices.
• The need for detailed electricity system modelling with and without incremental package demand.
• Differences between hourly operational information and monthly fuel-cost data used in FCA calculations.

NEPRA explained that these factors needed to be examined to isolate the actual additional generation costs associated with the package.

This is why the regulator did not simply adopt Rs31.83 as the new rate.

Instead, it accepted Rs25.30 provisionally while requiring a more comprehensive technical review.

How Could the Package Affect Other Electricity Consumers?

The controversy is not limited to industrial consumers benefiting from the package.

A major concern raised during the review was the possibility that the difference between the cost of supplying incremental electricity and the amount recovered from eligible consumers could be transferred to other electricity users.

NEPRA’s decision explains that the original package had a mechanism under which certain differences between actual marginal costs and the approved package rate could be borne by all consumers through fuel cost adjustments.

The regulator also highlighted that incremental units are excluded from quarterly tariff adjustments under the package’s existing arrangements.

According to the dissenting members, these mechanisms could increase the adjustment burden on consumers who are not receiving the special package benefit.

This issue is particularly important for households, commercial establishments and businesses that pay electricity bills without qualifying for the incremental consumption arrangement.

The disagreement therefore centres on how the financial cost of encouraging additional electricity consumption should be distributed across the power system.

Separate Rs2.37 Per Unit FCA Increase for November Bills

Alongside the industrial package revision, NEPRA approved another electricity cost adjustment that will affect a much wider group of consumers.

The regulator allowed distribution companies to recover an additional Rs2.37 per unit through the November 2026 electricity bills under the monthly Fuel Cost Adjustment mechanism.

The adjustment is intended to recover approximately Rs25 billion in additional fuel-related costs.

This is separate from the Rs25.30 incremental consumption package rate.

The two decisions should not be confused:

1. Rs25.30 per unit: A provisional rate for eligible incremental electricity consumption under a special industrial and agricultural package.
2. Rs2.37 per unit: An additional monthly fuel cost adjustment approved for recovery through November electricity bills.

The FCA adjustment is not restricted to businesses benefiting from the incremental consumption package.

What Does the Decision Mean for Pakistani Industries?

For manufacturers, electricity costs are a major component of operating expenses. Industries such as textiles, plastics, steel, cement, food processing and engineering rely on electricity to operate machinery, production lines and supporting equipment.

The revised package rate means eligible businesses will pay more for electricity units that qualify as incremental consumption.

For example, consider a factory that qualifies for 10,000 incremental units in a billing month.

This is an illustrative calculation before any other applicable bill components, taxes or adjustments. It assumes all 10,000 units qualify under the package.

For larger factories, the additional expense could become more significant depending on the amount of eligible incremental electricity consumed.

Businesses should therefore examine their reference consumption, eligible units and electricity bills before estimating the financial impact.

The change may also influence decisions about production schedules, grid electricity usage and alternative energy sources.

However, the actual effect will differ between businesses because their electricity consumption patterns, package eligibility and operating costs are not identical.

What Happens Next?

NEPRA has directed the Ministry of Energy and relevant power-sector entities to complete the outstanding technical assessment.

The review must cover the first review period, December 2025 to May 2026, and the second period, June to November 2026.

The regulator wants the assessment to include generation dispatch conditions, fuel availability, relevant fuel prices, operational constraints and system modelling.

It has also directed the authorities to reconcile the calculations with the relevant fuel cost adjustment information and provide separate assessments for the review periods.

The purpose is to establish a more reliable estimate of the marginal cost attributable to incremental consumption and determine whether the package should continue, be revised, modified or terminated.

NEPRA has warned that failure by relevant entities to provide the required information within the stipulated timelines could result in an adverse decision, including suspension or termination of the programme where legally applicable. It has also warned of possible legal proceedings for non-compliance.

For now, the Rs25.30 rate remains applicable from November 2026, pending a further decision.

Frequently Asked Questions

1. Has NEPRA increased the electricity tariff for all industries to Rs25.30 per unit?

No. The Rs25.30 rate applies to eligible incremental electricity consumption under a special package. It is not the standard electricity tariff for every industrial unit.

2. What was the previous incremental electricity rate?

The previous rate under the package was Rs22.98 per unit.

3. When will the revised rate take effect?

The revised rate applies from the November 2026 billing month.

4. How much has the incremental rate increased?

The rate has increased by Rs2.32 per unit, from Rs22.98 to Rs25.30, representing approximately 10.1%.

5. Why did two NEPRA members oppose the increase?

They argued that the proposed rate was not supported by sufficiently reliable evidence and that NEPRA’s tariff team had calculated a marginal cost of approximately Rs31.83 per unit. They recommended temporarily suspending the package until a proper review was completed.

6. What is the additional Rs2.37 per unit charge?

It is a separate monthly Fuel Cost Adjustment approved for November 2026 bills to recover approximately Rs25 billion in additional fuel-related costs.

7. Does the package cover agricultural consumers?

Yes. The Incremental Consumption Package covers eligible industrial and private agricultural electricity consumers of ex-WAPDA distribution companies and K-Electric.

8. Can NEPRA change the Rs25.30 rate again?

Yes. The current rate is provisional. NEPRA can reconsider the package after receiving and examining the comprehensive technical review.