Govt Seeks Rs. 1.20 Per Unit Fuel Charge in August Electricity Bills

The Pakistani government is seeking an additional Rs. 1.20 per unit fuel cost adjustment in August 2026 electricity bills to recover Rs. 15.7 billion for electricity consumed in June, as revealed at a NEPRA (National Electric Power Regulatory Authority) public hearing in Islamabad on Wednesday. Government officials also indicated they are working on a new power tariff package, even as nationwide electricity consumption dropped 3.3 per cent below last year's June figure — raising fresh questions about affordability-driven demand suppression.

Fuel Cost Adjustment of Rs. 1.20 Per Unit for August Bills

The fuel cost adjustment (FCA) mechanism allows utilities to recover the difference between the reference fuel price embedded in the approved base tariff and the actual cost of fuel used to generate electricity in a given month. For June 2026, that gap amounts to Rs. 1.20 per unit, translating into a total recovery of Rs. 15.7 billion from consumers across all distribution companies.

The primary driver of elevated costs was the non-availability of Qatar's contracted LNG (liquefied natural gas). With contracted supply volumes missing, utilities procured replacement gas at spot market rates and supplemented generation with furnace oil — both significantly more expensive than the pipeline LNG priced into the base tariff. This fuel shortfall, compounded by reported outages at three nuclear power plants, raised the effective per-unit generation cost well above the reference assumption.

At the same hearing, government representatives signalled that a new power tariff package is under preparation — suggesting structural changes to base rates may follow in the coming months, beyond the routine monthly FCA mechanism.

Electricity Demand Falls Across Almost Every Consumer Category

The Power Division reported that total units sold in June 2026 stood at 9.995 billion units, compared with 10.337 billion units in June of the previous year — a year-on-year decline of roughly 3.3 per cent. June consumption also came in approximately 5 per cent below the Power Division's own monthly estimate, suggesting internal projections have not fully accounted for the scale of demand weakness.

The decline cut across almost every consumer category:

• Domestic and commercial consumers: down 3.5 to 5 per cent year-on-year
• Agriculture sector: down 12 to 29 per cent
• Bulk consumers: significant year-on-year declines
• Industry: the only growth category, up 2.8 per cent

The broad-based contraction raises a serious concern that higher electricity prices are suppressing consumption rather than encouraging genuine efficiency. For the sector, fewer units sold means lower DISCO (distribution company) revenues, which risks deepening the circular debt that already burdens Pakistan's power system and limits its ability to invest in grid improvements.

NEPRA Questions Sector Performance and Criticises Loadshedding

NEPRA used Wednesday's hearing to press power sector entities on multiple fronts. The regulator criticised what it described as excessive, revenue-based loadshedding — the practice of cutting supply to areas with poor bill recovery rather than managing genuine grid constraints. NEPRA Member Development Maqsood Anwar Khan pointed to a troubling contradiction: DISCOs were reporting falling demand while consumers across Pakistan were protesting prolonged outages. Commercial loadshedding was also criticised as a separate concern.

NEPRA additionally flagged persistent system constraints limiting the dispatch of cheaper available capacity — a structural problem in Pakistan's power merit order that forces greater reliance on expensive fuels. Combined with the nuclear plant outages and spot LNG purchases, these constraints create a compounding effect: the cheapest generation sources are offline or under-used while expensive alternatives fill the gap, directly inflating the FCA liability ultimately paid by consumers.