The National Electric Power Regulatory Authority (NEPRA) on Thursday prepared a plan for reduction in prices of the commodity by Rs25 a unit. NEPRA submitted a document to the government suggesting that by revising per-unit capacity payment downwards and revision of surcharges, the electricity tariff can be reduced. It suggested that electricity prices can be reduced by overcoming operational shortcomings. It noted that of Rs45.06 per unit cost, Rs17.01 per unit is capacity charges.

Moreover, Rs15.28 per unit are charged as tax and surcharge, and distribution companies charge Rs3.10 per unit as distribution margin from consumers. NEPRA noted that one paisa per unit is collected in the name of maintenance, revenue generation and adjustment for the next year. In addition to that, Rs1.37 per unit are transmission charges. The power regulator revealed that the net average production cost of electricity is Rs7.62 per unit. The NEPRA formula states that with the abolition of surcharges of Rs7.52 and adjustment of 67 paisa, the price of electricity will be reduced by Rs25.20 per unit.

If applied the formula, a unit of electricity that is Rs45.06 at present will come down to Rs20.04 per unit. On Tuesday, NEPRA released its State of Industry Report 2024 and asked the government to review Rs15.28 per unit taxes on electricity. It also mentioned underutilization of generation capacity as one of the main challenges to the power sector. By the end of fiscal 2023-24, the installed power generation capacity reached 45,888MW, while the average annual utilization during the same period was only 33.88pc.

Credit: Independent News Pakistan (INP)