ISLAMABAD – The National Electric Power Regulatory Authority (Nepra) has revealed startling details about Pakistan’s electricity pricing. According to Nepra’s latest report, the cost of producing electricity at Rs7.62 per unit skyrockets to Rs45.06 per unit for consumers due to seven different types of taxes, surcharges, and adjustments.
Breakdown of Electricity Costs
The table below outlines how the cost of electricity increases from production to the final consumer price:
| Cost Component | Amount (Rs per Unit) | Description |
|---|---|---|
| Base Cost of Electricity | 7.62 | Production cost of electricity |
| Taxes and Surcharges | 15.28 | Includes New Year surcharge (67 paisas) |
| Discos’ Margin | 3.10 | Distribution companies’ profit margin |
| Bill Adjustments | 0.01 | Minor adjustment in billing |
| Transmission Charges | 1.37 | Cost for electricity transmission |
| Capacity Payments | 17.01 | Payment to power producers |
| Total Cost to Consumers | 45.06 | Final price per unit of electricity |
Key Cost Drivers
-
Taxes and Surcharges:
- Consumers bear a heavy tax burden, with Rs15.28 per unit attributed to various taxes.
- The New Year surcharge alone adds 67 paisas per unit.
-
Capacity Payments:
- The most significant contributor, Rs17.01 per unit, goes toward capacity payments to ensure the availability of electricity from power producers.
-
Transmission and Distribution:
- Transmission costs and Discos’ margins add Rs4.47 per unit.
Impact on Consumers
The steep increase in electricity costs severely affects households and businesses, making energy access increasingly unaffordable. Consumers are effectively paying six times the base cost of electricity, highlighting inefficiencies and additional financial burdens within the system.
Call for Reforms
Nepra’s report underscores the urgent need for reforms in the power sector. By reducing taxes, improving operational efficiencies, and revising capacity payment structures, policymakers could alleviate the financial strain on consumers.
The table below provides a summary of potential areas for reform:
| Reform Area | Potential Impact |
|---|---|
| Reduce Taxes | Lower electricity costs for consumers |
| Improve Transmission Efficiency | Minimize additional charges |
| Revise Capacity Payments | Reduce the largest cost component |
Efforts to address these challenges could pave the way for a more transparent and affordable electricity pricing system in Pakistan.
