Pakistan notified its FY2024-25 electricity tariff rebasing on 14 July 2024, two days after IMF staff announced a staff-level agreement on a 37-month Extended Fund Facility of about USD 7 billion. The two are linked. The IMF statement listed "timely adjustment of energy tariffs, decisive cost-reducing reforms, and refraining from further unnecessary expansion of generation capacity" among the programme's goals.
NEPRA's decision of 11 July, on the federal government's motion, sets out the numbers. The total revenue requirement for distribution companies in FY2024-25 is Rs3,768 billion, up from Rs3,281 billion. The national average base tariff rises from Rs29.78 to Rs35.50 per unit, an increase of Rs5.72. Of that, Rs4.86 per unit comes from a higher power purchase price.
Where the increase comes from
Two calculations from NEPRA's figures matter. The average base tariff rises 19.2 per cent (35.50 divided by 29.78). And 85 per cent of the increase (4.86 of 5.72) is the cost of buying power, before distribution margins, losses or prior-year adjustments. Business Recorder's account of CPPA-G's hearing presentation put the assumed capacity charge at Rs18.39 per unit against an energy charge of Rs10.94. If those figures hold, fixed payments to generators are now well over half the cost of a unit before it leaves the transmission system.
That is the point the price-only debate misses. Most of this rebasing pays for plants whether or not they run. Higher tariffs suppress demand, lower demand spreads the same capacity payments over fewer units, and the next rebasing has to rise again.
Households carry the shift
The category table in NEPRA's decision is more revealing than the average. The NEPRA-determined average residential tariff rises from Rs26.06 to Rs35.24 per unit, an increase of Rs9.18, or about 35 per cent on our calculation. Commercial rises by Rs8.96, from Rs36.54 to Rs45.50, and agriculture by Rs5.53. General services and bulk supply also rise. The industrial average falls slightly, from Rs32.45 to Rs31.77. The government is deliberately moving cross-subsidy away from industry, which has been leaving the grid for captive generation, and onto households.
That is sound economics for export competitiveness and risky economics for the grid. Households facing a third more per unit have the strongest incentive yet to install rooftop solar, which is the very behaviour that erodes the sales base. The decision does not model that response.
Who pays when
The government chose not to pass the full increase through immediately. Under the decision, consumers see Rs3.29 per unit of the increase from July to September 2024 and Rs4.55 per unit from October to June 2025, with the federal government covering the difference as subsidy. Domestic consumers using up to 200 units a month were shielded from the rebasing for July to September, funded by Rs50 billion from the development budget, according to Business Recorder. Protected consumers using 101 to 200 units, for example, were to pay Rs10.06 per unit in that quarter instead of Rs14.16.
Summer relief for small users is defensible politics. It is also a timing device: the full rate arrives in October, after the peak cooling bills.
Our view
We think the rebasing was necessary and that it should be judged by what follows, since it buys time without changing costs. The IMF agreement commits Pakistan to replacing household cross-subsidies with targeted cash support through BISP over time, and to cost-reducing reforms. Neither appears in the July decision, which is a pricing exercise.
The test is the next two quarterly adjustments. If the capacity component keeps rising, the rebasing will have done what previous ones did: shifted the bill onto a shrinking group of paying customers while rooftop solar and captive supply take the rest.