PD pursuing plan to reduce average power tariff to Rs28.99/kWh

ISLAMABAD: Power Division is reportedly working on a plan to reduce average electricity tariff to Rs 28.99 per kWh and eliminate Tariff Differential Subsidy (TDS) from June 27, well informed sources told Business Recorder.For the calendar year 2026, National Electric Power Regulatory Authority (NEPRA) has set the national average electricity tariff in Pakistan at approximately Rs 31.59 per kilowatt-hour from Rs 32.73 per kWh of 2024-25.Power Division will also share power sector’s performance and future plans with the visiting team of International Monetary Fund (IMF).According to sources, circular debt which was 2.393 trillion as of June 30, 2024 was planned to decline to Rs 1.2 trillion by June 27 but its target has been revised to Rs 1.346 trillion for June 27.READ MORE: KE seeks Rs47.1bn Tariff Differential Subsidy for FY26-27The government recently approved Technical Supplementary Grant (TSG) of Rs 200 billion to keep the circular debt in accordance with the target agreed with the IMF. The injection of Rs 200 billion was structured as an investment in the equity of Power Distribution Companies (DISCOs) to address cash flow constraints.The government has already swapped circular debt stock of Rs 2.4 trillion in six years through refinancing Rs 1.275 trillion at cheaper rate being serviced by Debt Service Surcharge (DSS) of Rs 3.23 per kWh across the country.Discos recovery which was 90 percent on June 30, 2024 is likely to be increased to 97.34 percent by June 2027 as against earlier target of 95 percent.Transmission and Despatch (T&D) losses which were 18.3 percent on June 30, 2024 were planned to be reduced to 14 percent by June 2027 but the target will be missed and it will remain at 14.7 percent. The sources further stated that share of imported fuel in generation mix which was 24.2 percent in 2024-25 will be reduced to 20.5 percent.Subsidies planned at Rs 1.1 trillion in June 2027, have now been projected at Rs 936 billion.The sources said, tariff differential subsidy will be eliminated from June 1, 2027 as data matching of BISP beneficiaries has completed. However, consensus has not been achieved for a voucher scheme. Power Division and Poverty Alleviation and Social Safety (PASS) will jointly work on a subsidy scheme for 16.5 million consumers by June 2027.The sources further stated that utilisation of average available capacity for the year will be increased to 58 percent by June 2027 from 52 percent in June 2024.The sources further stated Power Division will also take up the issue of three years’ incremental package (subsidy neutral) with the IMF team so that discrepancies may be sorted and made more consumption friendly.The package had jointly been prepared by the Power Division and World Bank and its approval was sought from the highest level of WB and IMF.The country’s business community has claimed repeatedly that main factor of increase in electricity consumption is shifting of industry from captive to national grid. The government circles accept that the incremental package has not given the presumed results despite the fact that generation increased by 14 percent in January 2026 as compared to corresponding month of 2025.Copyright Business Recorder, 2026

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