Power shock looms as Rs36.5bn fuel burden nears

NEPRA on Thursday reserved its decision on a request submitted by the Central Power Purchasing Agency-Guaranteed (CPPA-G) seeking a monthly fuel

ISLAMABAD: Electricity consumers across Pakistan may face a substantial increase in their September bills as the National Electric Power Regulatory Authority (NEPRA) considers passing an additional Rs36.54 billion in fuel costs on to consumers.

NEPRA on Thursday reserved its decision on a request submitted by the Central Power Purchasing Agency-Guaranteed (CPPA-G) seeking a monthly fuel adjustment of Rs2.52 per unit for electricity consumed in July 2026.

According to the CPPA-G, the actual fuel cost of electricity generation climbed to Rs9.6112 per unit in July, compared with the reference cost of Rs7.0929 per unit. The agency has sought recovery of the difference through the monthly fuel price adjustment mechanism.

The proposed increase has drawn opposition from the Karachi Chamber of Commerce and Industry (KCCI), which urged the government to reduce reliance on costly imported LNG and make greater use of locally available furnace oil where technically feasible. The chamber also called for the removal of the levy imposed on furnace oil.

KCCI warned that consumers could ultimately face an impact of around Rs6 per unit from September, as the proposed Rs2.518 per unit monthly adjustment could coincide with a Rs1.52 per unit upward quarterly adjustment for the second quarter of calendar year 2026. At the same time, a Rs1.98 per unit relief granted under the first-quarter adjustment is due to expire.

The business community also questioned the reduction in the reference fuel cost, arguing that it had helped lower the government’s subsidy requirement while shifting an estimated Rs250 billion burden towards electricity consumers.

The proposed increase marks a sharp reversal from July 2025, when consumers received a refund of Rs1.79 per unit under the fuel adjustment mechanism.

Power generation costs rose significantly during July, increasing by 38.15% to Rs162.55 billion, while electricity generation grew by only 7.07% to 15,122 gigawatt-hours.

Imported fuels remained a major contributor to the increase. The cost of electricity generated through re-gasified liquefied natural gas (RLNG) more than doubled to Rs47.38 per unit from Rs22.03 a year earlier, despite RLNG-based generation declining by 33% to 1,629 GWh.

Meanwhile, generation from imported coal increased to 2,169 GWh, with its cost reaching Rs16.33 per unit. In comparison, electricity produced from local coal remained considerably cheaper at Rs10.42 per unit, highlighting the growing cost gap between imported and domestic fuel sources.

NEPRA’s final decision on the proposed adjustment will determine the extent to which these higher generation costs are reflected in consumers’ September electricity bills.