Another Electricity Tariff Shock Looms Under FCA Review

Electricity consumers across Pakistan may be exposed to another upward tariff adjustment as regulators consider a proposed increase of 48 paisa per unit under the fuel cost adjustment (FCA) for December, notwithstanding a significant rise in electricity demand, rapid expansion of solar generation, and strong opposition from industrial stakeholders.

The National Electric Power Regulatory Authority (NEPRA) conducted a public hearing on an application submitted by the Central Power Purchasing Agency (CPPA), which maintained that higher electricity consumption and increased reliance on costlier fuels during the winter months have resulted in elevated power generation costs.

CPPA informed the regulator that nationwide electricity consumption increased by 22 percent compared to the corresponding month last year, primarily due to higher demand from the industrial and agricultural sectors. Official data presented at the hearing showed that industrial electricity consumption rose from 2 billion units in December 2024 to 2.4 billion units in December 2025, indicating improved economic activity following the introduction of power relief packages.

Officials further stated that approximately 44 percent of industrial consumers and 39 percent of agricultural consumers benefited from these relief measures, while total electricity generation on an annual basis recorded an increase of 2.4 percent. Peak demand also exhibited a marked rise, with maximum system load increasing from 13,792 megawatts in December 2024 to 14,886 megawatts in December 2025, according to figures provided by the National Power Control Centre (NPCC).

However, NPCC officials acknowledged that the rapid growth of solar power generation is increasingly offsetting grid-based demand, particularly during daylight hours. They disclosed that an estimated 9,000 to 10,000 megawatts of electricity is currently being generated daily through net metering, substantially reducing dependence on the national grid and reshaping consumption patterns.

The proposed FCA increase drew strong objections from representatives of the industrial sector, who cautioned that any further escalation in electricity prices would seriously erode competitiveness. Participants at the hearing argued that existing tariffs are already unsustainable and that the proposed adjustment effectively constitutes a concealed price increase. One representative warned that industry cannot operate viably under the prevailing tariff regime.

In response, power sector officials contended that while the monthly FCA may increase, the forthcoming quarterly adjustment is expected to decline, potentially providing some relief in the near term. They explained that hydropower generation typically declines during winter months, necessitating greater reliance on expensive thermal fuels, whereas higher hydel output in summer generally reduces fuel costs and moderates FCA pressures.

NEPRA officials also pointed to structural and administrative challenges, noting that preparation of the industry performance report requires data collection from over 200 institutions, rendering the exercise complex. They stated that steps are being taken to enhance data accuracy and strengthen regulatory oversight.

Following the conclusion of the hearing, NEPRA announced that it would conduct a detailed examination of the submitted material and issue a reasoned determination after further analysis, as consumers and industry await the regulator’s final decision