The National Electric Power Regulatory Authority (Nepra) has approved a uniform national average tariff for DISCOs and K-Electric (KE) for Calendar Year 2026, a decision that has triggered sharp criticism from industrial and export-oriented sectors over cross-subsidy burdens.

During a public hearing on Monday, industry stakeholders warned that the cross-subsidy load—estimated at nearly Rs130 billion on industrial and export consumers—has made manufacturing uncompetitive and export expansion unviable.

The hearing was convened following the federal government’s request for a uniform tariff determination after Nepra’s earlier rebasing decision, which set the average tariff for CY 2026 at Rs33.38/kWh, down from Rs34.00/kWh in FY 2025-26—a net reduction of 61 paisa per kWh.

Under Section 31(4) of the Nepra Act, the Authority is required to determine a uniform tariff for state-owned distribution licensees once the federal government files a consolidated application. The Power Division submitted the required motion, requesting the issuance of a revised Schedule of Tariff (SoT) for KE effective January 1, 2026, in line with national electricity policy.

The hearing was officiated by Chairman Nepra Waseem Mukhtar, Member (Development) Maqsood Anwar Khan, and Member (Law) Amina Ahmed.

Industry Opposes Cross-Subsidy Burden

Industry representatives disclosed that cross-subsidies total Rs131 billion within DISCOs and around Rs160 billion within KE’s network, pushing electricity costs for industrial consumers up by Rs7 per kWh.

Speakers cited comparative examples, noting that industrial tariffs in China range between 5–8 cents/kWh, enabling rapid textile expansion in regions such as Xinjiang. By contrast, Pakistan’s industrial tariff averages 12.9 cents/kWh, with Chinese yarn and fabric already displacing domestic textile output.

Stakeholders argued that eliminating the cross-subsidy would lower industrial tariffs to around 9 cents/kWh, helping restore export competitiveness. They also highlighted structural impacts—such as Pakistan’s spinning capacity dropping from 10.25 million spindles to nearly half, while China continues to expand capacity domestically.

Industry leaders further noted that households are increasingly installing small-scale solar systems to remain below the 200-unit slab, keeping eligibility for subsidised rates intact, which they said shifts additional financial burden onto industry.

Calls for Tariff Reform

Speakers including representatives from APTMA called for:

• removal of embedded industrial cross-subsidies,
• elimination of peak/off-peak tariff structures,
• targeted subsidies via the federal budget instead of electricity bills,
• transparent disclosure of cross-subsidy amounts, and
• voltage-wise cost-of-service adjustments for B-category consumers.

They argued that aligning large-scale manufacturing tariffs with regional benchmarks would support exports, boost investment, expand employment and improve grid utilisation—reducing per-unit costs for all consumers.

Government Position & Cost Trends

Responding to concerns, Power Division officials stated that industrial cross-subsidies have already been reduced from Rs225 billion to Rs102 billion, translating to a cut of Rs5.13 per kWh, while average industrial tariffs have fallen from Rs62.33/kWh in March 2024 to Rs46.31/kWh — a 26% reduction.

The Power Division also presented updated sector data:

• Installed capacity: 58,013 MW
• Grid-available power: 36,397 MW
• KE capacity: 2,647 MW
• Net metering: 6,340 MW
• Off-grid solar: 12,629 MW

Under the revised IGCEP, capacity is projected to reach 87,209 MW by 2035, with 90% clean energy, 10% fossil fuels, and 96% domestic resources.

Pakistan’s power import bill, which peaked at $2.4 billion, is projected to fall to $0.3 billion by 2035.

Solar Adoption Shrinking Electricity Sales

Officials noted that rising solar adoption has reduced grid sales from 113 billion units in 2023 to an expected 101 billion units in 2026, creating an estimated Rs3.5 per kWh financial burden on remaining grid consumers.

For CY 2026:

• Energy charges: ↓ Rs1.74/kWh
• Capacity charges: ↑ Rs0.50/kWh
• Use of System: ↑ Rs0.51/kWh
• Distribution margin: ↑ Rs0.26/kWh
• Prior-year adjustments: ↑ Rs0.14/kWh

Net revenue requirements are projected to decline by 61 paisa per kWh.

The Power Division also said circular debt, recorded at Rs1.6 trillion in June 2025, is expected to remain stable due to seasonal offsetting.