News
NEPRA Approves New Electricity Charges for Pakistan's Competitive Power Market
By Mariam Khan
Real Estate Analyst
3 min read
The National Electric Power Regulatory Authority (NEPRA) has notified electricity network-use charges ranging from Rs6.23 to Rs19.62 per unit for eligible bulk consumers taking part in the competitive electricity market. The decision clears a regulatory hurdle for the planned first-phase auction of 400MW of electricity. The network charges are in addition to the negotiated electricity supply price. This is not a general household tariff increase.
Why the Charges Apply Only to Eligible Bulk Consumers
The charges apply to eligible bulk consumers who buy power in the competitive market. Ordinary households and small businesses are not covered. The reports we have seen do not define "eligible", so the size or category that qualifies should be checked in NEPRA's notification.
Why the Range Is So Wide
The lowest charge is Rs6.23 per unit and the highest Rs19.62, about three times as much (our own calculation). The reports do not explain what sets a consumer's place in that range, such as voltage level, location or the distribution company concerned, and we have not assumed a cause. A buyer's actual cost will depend on where it falls, so the range itself says little about any one factory.
Why the Charges Are Added to the Supply Price
In this market, buyers and suppliers negotiate the supply price directly, and the network charge is added on top. The network charge is therefore a cost that sits outside the negotiation. Whether the total works out cheaper than the regulated tariff will depend on the negotiated price and the buyer's network charge. The reports do not give any such comparison, and we do not make one.
Why the 400MW Auction Is Still Only Planned
The decision clears a hurdle for the first-phase auction of 400MW, but the reports do not give a date for it, or say who may bid or how it will work. A cleared hurdle is not a launched auction, and we treat the auction as planned.
Why Industrial Costs Are Under Wider Review
Industrial power pricing has been under discussion elsewhere. NEPRA is reviewing a proposed incremental package, as in our report on the Rs22.98 per unit industrial electricity incentive, and the IMF has asked for more data on a proposed time-of-use tariff, as in IMF Seeks More Data on Pakistan's Proposed Industrial Power Tariff. Consumers also face the Rs1.11 per unit fuel-cost adjustment for October bills. The reports on the network charges do not link them, so we treat them as separate decisions.
What This Means for Industry, Builders and Investors
Large industrial users, including makers of cement, steel and other construction materials, may eventually have another way to buy power, but only if the negotiated price plus the network charge works out in their favour. For now, the decision does not change anyone's electricity bill. Developers and buyers should not expect an effect on material prices from this notification alone. The signals to watch are the auction date and rules, the negotiated prices that result and the number of consumers that qualify. Decisions are published by NEPRA and the Power Division.