While the pressure is on for a more lenient approach in the upcoming budget and for economic stimulus, electricity bills are threatening to move in the opposite direction. During a public hearing held by Nepra on Thursday (February 26), the Central Power Purchasing Agency (CPPA-G) asked the regulator to allow an additional Rs1.78 per unit collection from power consumers under the January 2026 fuel cost adjustment (FCA). If approved, the hike will reportedly be recovered in the March bills. According to the CPPA-G, consumers were charged a reference fuel cost of Rs10.395 per unit in January, but the actual cost surged to Rs12.1768 per unit amidst declining hydropower generation and a rise in peak demand. This led to an increased reliance on costly fuels such as RLNG and furnace oil. While it has not yet been decided whether consumers will bear the additional burden, historically, ordinary Pakistanis are the ones who pick up the tab. And few tabs are more infuriating and eye-watering than the electricity bill. One pays through the nose to companies that often cannot even provide electricity reliably, with loadshedding striking both those who pay and those who do not pay their bills. The absurdity of the situation is compounded by the fact that, despite all the hefty bills, Pakistan’s power distribution managed to bleed a combined Rs 397 billion in FY2024-25.
This apparently comes down to transmission and distribution losses and weak bill recoveries. So, if the power sector cannot generate or transmit and distribute power efficiently or even collect bills properly, what exactly can it do and how long will consumers be billed or deprived of power for its inefficiency? While the Power Division has reportedly said that the performance of distribution companies is being misrepresented, citing an unprecedented Rs780 billion cut in the circular debt in FY2024-25, rising recovery rates and narrowing transmission and distribution losses, there is still clearly a lot of work to be done. According to Nepra’s Performance Evaluation Report of Operational Power Plants for FY2024-25, 61.0 per cent of the total Rs2.9 trillion power purchase cost, excluding electricity imported from Iran, was spent on the Capacity Purchase Price. These are the fixed payments made to producers regardless of output. The overall utilisation of thermal power plants stood at 42.5 per cent, while renewable energy plants operated at an average utilisation of 36.6 per cent. The country is not fully utilising its plants and is relying too much on expensive fuels for generation. When the resulting power is sent out to consumers, transmission and distribution losses are high, and bill recoveries are not where they should be.
So how exactly can Pakistan’s power sector work better? Privatisation is a solution that is always brought up whenever it comes to the country’s inefficiencies, but the results in the power sector have not been great thus far. Despite being privatised in 2005 to modernise generation and improve service delivery, K-Electric’s system reportedly operated at an average utilisation rate of just 34.6 per cent in FY2024-25 and continues to rely heavily on imported fuels. Whatever the best answer is, it cannot simply be asking consumers to pay more again. Salaries are flat, the poverty rate rose by 7.0 per cent between 2019 and 2025 and the salaried classes are now the single largest tax contributors in the nation. They simply cannot be asked to do more.
