Electricity consumers in Karachi and across Pakistan may face higher tariffs as the National Electric Power Regulatory Authority (Nepra) concluded a hearing on Thursday regarding a petition seeking a Rs1.78 per unit increase under the monthly fuel cost adjustment (FCA) mechanism.

The petition, filed by the Central Power Purchasing Agency (CPPA) for the January monthly adjustment, requests an increase of Rs1.78 per unit.

During the hearing, officials reported that 8.76 billion units of electricity were sold in January. The reference fuel cost for the month was set at Rs10.39 per unit, while the actual fuel cost stood at Rs12.17 per unit.

CPPA officials stated that the proposed increase was mainly due to lower hydropower generation and higher electricity consumption during the month.

A Punjab Nepra member, Amina Ahmed, noted that electricity prices were continuing to rise. “We were expecting improvement, but things appear to be moving in the opposite direction,” she said, questioning the operation of furnace oil-based power plants in January.

Officials explained that furnace oil plants were used to meet the increased peak demand. Another member, Maqsood Anwar, added that the requested increase was linked to furnace oil usage, while Amina reiterated that developments were contrary to expectations.

According to the CPPA’s petition, under existing government policy guidelines, the proposed increase would also apply to K-Electric consumers. The regulator reserved its decision, which will be announced at a later date.

Power Division cites ‘historic improvement’

Meanwhile, the Power Division issued a statement asserting that, contrary to Nepra’s report, the power sector witnessed a “historic improvement” during fiscal year 2025. The division stated that circular debt declined by Rs780 billion, falling from Rs2,393 billion to Rs1,614 billion.

It added that improved performance by distribution companies (Discos) contributed Rs193 billion in relief, while negotiations with power producers over Late Payment Interest (LPI) waivers saved Rs260 billion.

Macroeconomic improvements reportedly contributed over Rs300 billion to the sector. According to the division, the recovery rate improved from 92.4% to 96.6%, while under-recoveries fell by Rs183 billion, dropping from Rs315 billion to Rs132 billion.

Transmission and distribution (T&D) losses were reduced from 18.3% to 17.6%, resulting in savings of Rs11 billion.

The division noted that load-shedding is being carried out according to the Aggregate Technical and Commercial (AT&C) loss-based policy and warned that eliminating AT&C-based load-shedding could impose an additional annual burden of Rs500 billion.

It added that progress is being made in transformer-level targeted load management and maintained that ongoing power sector reforms are moving in the right direction.