Pakistan seeks Rs2.56 per unit power increase, with Rs32.7 billion impact projected for November bills

September fuel costs put November electricity bills under pressure

Pakistan's Central Power Purchasing Agency (CPPA) has requested an electricity fuel adjustment of Rs2.56 per unit for September, while the Power Division projects that the increase would add Rs32.7 billion to consumers' November 2026 bills. The National Electric Power Regulatory Authority (NEPRA) has scheduled a hearing on the application for October 29.

The application puts September's average fuel cost at Rs10.02 per unit, against an allowance of Rs7.46. The Rs2.56 difference is the amount CPPA wants to recover through the monthly fuel adjustment. A unit of electricity means one kilowatt hour, the energy used by an appliance consuming 1,000 watts for one hour.

The Power Division, in a statement issued on October 15, said the projected adjustment had been contained through electricity supply cuts and the provision of imported gas at domestic gas prices. It said the adjustment could otherwise have reached Rs5 to Rs6 per unit.

Consumers face two connected costs: a higher electricity charge and interruptions that the government says reduced the need to run expensive power plants. The final adjustment, the categories of consumers required to pay it and the billing arrangements remain subject to NEPRA's regulatory decision.

How the Rs2.56 adjustment is calculated

CPPA's application compares the fuel allowance already built into electricity charges with the fuel expense incurred during September. When the actual expense exceeds that allowance, the agency seeks an additional recovery through the fuel cost adjustment, also called the fuel price adjustment.

The increase from Rs7.46 to Rs10.02 is approximately 34.3% of the fuel allowance. That comparison concerns the fuel component of electricity costs. A consumer's complete bill also includes other charges, so the percentage change in the final bill would depend on its full calculation.

A customer with 300 units subject to the proposed adjustment would face an additional fuel charge of Rs768. At 500 applicable units, the charge would be Rs1,280. These examples apply the proposed Rs2.56 rate alone; taxes or other charges would depend on the approved billing treatment.

CPPA says distribution companies sold 12.76 billion units in September. Multiplying that volume by Rs2.56 produces approximately Rs32.67 billion, closely matching the Power Division's projected Rs32.7 billion impact. The figures connect the proposed rate with the estimated amount to be recovered from consumers.

Where September's fuel money went

CPPA put September's total electricity generation fuel cost at Rs127.87 billion. Imported coal accounted for Rs37.14 billion, while liquefied natural gas (LNG) accounted for Rs31.93 billion. Together, those two categories cost Rs69.07 billion, approximately 54% of the stated total.

The application also listed Rs13.89 billion for domestic gas, Rs13.26 billion for diesel, Rs11.81 billion for furnace oil and Rs7.95 billion for domestic coal. Diesel and furnace oil together accounted for Rs25.07 billion, or about one fifth of the total fuel bill.

Imported coal spending was about 4.7 times the spending on domestic coal. These are spending totals; calculating the cost of generating a unit from each fuel would also require the electricity output associated with each category.

The six listed categories add up to Rs115.98 billion, leaving Rs11.89 billion of the stated total without a detailed breakdown in the figures disclosed. NEPRA's review will determine the costs accepted for recovery.

The total fuel cost and sales figures also help explain the requested rate: Rs127.87 billion divided by 12.76 billion units is approximately Rs10.02 per unit, the average cited in the application.

Why the government used electricity cuts

The Power Division said targeted load management lasting approximately two to two and a half hours during September reduced the need to generate electricity from furnace oil and diesel. Load management means deliberately limiting electricity supply to keep demand within the amount the system can provide under its operating constraints.

The ministry said this action, together with other measures, avoided an additional adjustment of up to Rs3.44 per unit. Adding that claimed saving to the proposed Rs2.56 produces Rs6 per unit, the upper end of the ministry's estimate of the adjustment without intervention.

The Power Division described the claimed saving in its statement:

Targeted load management and other measures helped limit the impact of expensive fuels used for power generation, saving consumers from an additional burden of up to Rs3.44 per unit.

Households and businesses experienced the supply cuts while the government sought to limit fuel spending. For a household, an interruption means appliances cannot run on grid electricity. For a business, it can interrupt work or require another source of power. The ministry's claimed saving measures the avoided electricity tariff charge; consumers also have to manage the practical cost of losing supply.

Imported gas pricing provided another cushion

The Power Division said supplying imported regasified liquefied natural gas (RLNG) to power generators at domestic gas prices reduced the potential burden by another 83 paisa per unit. One rupee contains 100 paisa, making that claimed relief Rs0.83 per unit.

LNG is natural gas cooled into liquid form so it can be transported by ship. It becomes RLNG when it is turned back into gas for use in pipelines and power plants. The ministry's measure concerned the price charged to electricity generators for that imported fuel.

The ministry presented the lower gas price as one of the steps that contained September's adjustment. Its statement gave a separate figure for the gas pricing relief alongside the savings attributed to load management and other measures, without a detailed reconciliation of how those estimates fit together.

Gas availability also affects which power plants must operate. The Power Division warned that a further reduction in RLNG supplies could increase reliance on more expensive fuels, putting additional pressure on electricity charges. Keeping gas supplies available therefore matters both for electricity production and for the fuel bill that follows.

Oil prices and supply disruptions drove the pressure

The Power Division attributed higher international fuel costs to regional conflict and disruption to supply chains following the closure of the Strait of Hormuz. It said Brent crude oil had exceeded $120 per barrel, compared with the approximately $70 benchmark used when Pakistan's base electricity tariff was set.

Those figures represent an increase of more than $50 per barrel, or more than 71% above the benchmark. The difference helps explain why an allowance fixed earlier can fall short when power producers have to buy fuel at higher market prices.

Furnace oil and diesel are particularly relevant to that pressure because both are petroleum fuels. September's Rs25.07 billion combined spending on those categories shows the scale of their role in the disclosed fuel bill, even as the ministry said supply cuts reduced their use.

The Power Division also cited Qatar's declaration of force majeure. In supply contracts, that term generally refers to an exceptional event invoked when circumstances prevent contractual obligations from being met. The ministry said Pakistan continued efforts to obtain RLNG through available contracted supplies and additional spot cargoes where necessary.

Spot cargoes are individual purchases made outside regular contracted deliveries. Their availability and price become more important when expected shipments are disrupted. The ministry said it was monitoring fuel markets and supply chains while trying to limit the effect on electricity consumers.

September's charge is higher than August's

The proposed September adjustment of Rs2.56 is Rs1.45 per unit above August's Rs1.11 adjustment. For 300 units subject to the charge, the difference between those two rates would be Rs435. For 500 applicable units, it would be Rs725.

The Power Division also said the combined effect of fuel adjustments and quarterly tariff adjustments from January through August 2026 had been limited to 65 paisa per unit, equivalent to 1.9% of the base tariff. Fuel adjustments account for changes in fuel expenses, while quarterly adjustments address other eligible electricity sector costs through a separate regulatory process.

The ministry attributed that result partly to changes in tariff arrangements and an electricity consumption package for industrial and agricultural users. It said the package encouraged those consumers to use more power from the national grid.

The September proposal introduces a larger monthly fuel charge after that earlier period. For consumers planning their spending, the immediate figures are the Rs2.56 proposed rate, the amount of September consumption to which it applies and NEPRA's eventual billing decision.

Industry challenges the consumption package as hearings continue

Industrial consumers have challenged the government's account of the consumption package's benefits. They contend that a marginal rate of Rs22.96 per unit benefits a limited group, while the actual marginal cost is approximately Rs34 per unit. Marginal cost means the cost associated with supplying an additional unit of electricity.

The difference between those figures is Rs11.04 per unit. Industrial consumers argue that roughly Rs11 is being passed into the average consumer tariff, spreading the cost among other users. The Power Division maintains that the package encouraged greater grid consumption by industrial and agricultural customers.

NEPRA held a public hearing on revising or suspending that package, with a decision pending. The package review concerns the pricing of additional consumption, while CPPA's September application seeks recovery of the monthly fuel cost gap.

The immediate timetable brings together electricity already consumed, a proposed recovery and the regulator's next hearing:

• January to August 2026: The Power Division says combined fuel and quarterly tariff adjustments added 65 paisa per unit.
• September 2026: CPPA records an average fuel cost of Rs10.02 per unit against an allowance of Rs7.46.
• October 15: The Power Division projects a Rs2.56 adjustment and a Rs32.7 billion impact on November bills.
• October 29: NEPRA is scheduled to hear CPPA's September fuel adjustment application.
• November 2026: The Power Division expects the approved September adjustment to appear in bills.

Key Points

• CPPA has requested a Rs2.56 per unit fuel adjustment for September, with a NEPRA hearing scheduled for October 29.
• The Power Division projects a Rs32.7 billion impact on November 2026 electricity bills.
• September's average fuel cost was Rs10.02 per unit against an allowance of Rs7.46, according to CPPA.
• Total fuel spending reached Rs127.87 billion, with imported coal and LNG accounting for approximately 54%.
• The government says targeted electricity cuts and imported gas pricing reduced the potential increase.
• Industrial consumers dispute the benefits of the additional consumption package, which is also under regulatory review.
• The final adjustment and billing arrangements depend on NEPRA's decision.