NEPRA has informed the government that the additional financial burden is negatively impacting industrial competitiveness, investment, and exports. Extra taxes, duties, and particularly the Debt Servicing Surcharge (DSS) have caused the actual cost of electricity for industrial consumers to rise sharply. This was stated by NEPRA Member (Technical) Rafiq Ahmed Shaikh in his additional note on the determination of the Quarterly Tariff Adjustment (QTA) for the first quarter of fiscal year 2025–26.
Rafiq Shaikh explained that the quarterly adjustment primarily reflects changes in the Power Purchase Price (PPP), which also includes transmission and distribution (T&D) losses. According to the data, the output of thermal power plants operating under take-or-pay contracts remained low—not only due to reduced demand but also because DISCOs conducted AT&C-based load shedding. He noted that the cost of DISCOs’ inefficiency is being transferred to paying consumers, while electricity thieves continue using power without load shedding, and the financial impact falls on regular consumers. As a result, electricity costs rise further, demand declines, plant output decreases, and tariffs increase even more.
He stated that capacity payments for the first quarter of FY 2026 reached nearly Rs. 500 billion, which is Rs. 19 billion higher than the same period last year. He stressed that capacity payments for old and inefficient power plants—including old GENCOs and WAPDA hydel plants—should be reviewed immediately, as they place an unnecessary burden on the power sector.
He added that the costs arising from under-utilized plants and dispatching expensive plants in violation of the Economic Merit Order (EMO) are further increasing overall generation costs. Therefore, immediate steps are required to improve operational efficiency and ensure the financial sustainability of the power sector. Seasonal and hourly fluctuations in power generation, aside from refinery plants, are also affecting the sector’s performance. Output from new hydropower, wind, and solar plants is also adding pressure on consumers due to their higher per-unit Power Purchase Price (PPP).
Rafiq Shaikh stressed that the burden of inefficiency in the power sector should not be passed on to consumers. Instead, the concerned institutions must bear this cost themselves. Transferring this burden to consumers will negatively impact industrial activity, reduce GDP growth, increase unemployment, widen the current account deficit, and harm socio-economic conditions.
Providing recommendations for industrial consumers, he suggested eliminating cross-subsidies, reducing taxes, duties, and DSS on industries, and reforming the Time-of-Use (TOU) tariff so that electricity becomes cheaper during off-peak hours and plant utilization improves. These reforms would not only restore industrial competitiveness but also strengthen the financial stability of the power sector.
He further said that since renewable energy plants do not include intermittency costs, consumers ultimately bear this burden. Due to the low output from existing take-or-pay plants, new plants can only be added if their per-unit electricity cost is lower than that of currently under-utilized plants. At present, renewable energy costs are higher than thermal generation, even though their EPP (Energy Purchase Price) is nearly zero or very low.
This situation indicates that without structural and financial reforms in the power sector, industrial competitiveness, investment, and export potential will continue to deteriorate, and without urgent reforms, the negative impacts on the national economy will persist.
