The gap between what was budgeted and what was spent gets passed to consumers
Across Pakistan, the quiet arithmetic of energy policy is once again making its way into household budgets. The state's power purchasing agency has asked regulators to approve a small but consequential increase in electricity charges for October, the result of August's actual generation costs outpacing what consumers were already paying. The gap — born of expensive imported fuels and the structural tensions of a mixed energy portfolio — now awaits a public hearing that will decide whether millions of Pakistanis absorb yet another increment of a burden they did not choose.
- Pakistan's power purchasing agency is seeking regulatory approval to add Rs0.1911 per unit to electricity bills in October, citing a Rs103.4 billion shortfall between budgeted and actual fuel costs in August.
- The cost pressure stems from heavy reliance on expensive RLNG plants at Rs21.73 per unit and Iranian electricity imports reaching Rs41.09 per unit — even as cheap hydropower covered nearly 40% of supply.
- The fuel charges adjustment mechanism, designed to smooth out monthly volatility, instead functions as a conveyor belt that reliably delivers cost spikes to consumers when generation expenses rise.
- A public hearing on September 29 will determine whether Nepra approves the increase uniformly across all distribution companies, including Karachi's private utility K-Electric.
- For households already rationing electricity use amid broader inflation, the prospect of another bill increase in October deepens a financial strain with no clear relief in sight.
Pakistan's electricity consumers are facing the prospect of higher bills in October after the Central Power Purchasing Agency-Guarantee asked the National Electric Power Regulatory Authority to approve an additional charge of Rs0.1911 per unit. The request reflects a familiar tension in the country's energy system: the reference fuel charge consumers were already paying — Rs7.3149 per unit — fell short of what power plants actually cost to run in August, when the average reached Rs7.5059 per unit across 14,218 gigawatt hours of total generation.
The composition of that generation mix explains much of the pressure. Hydropower, free of fuel costs, led supply at nearly 39 percent, and nuclear plants contributed 15 percent at a modest Rs2.19 per unit. But these cheaper sources were offset by heavier reliance on liquefied natural gas plants, which produced electricity at Rs21.73 per unit — roughly ten times the nuclear cost. Coal, both imported and local, made up 18 percent of the mix at costs between Rs12 and Rs14 per unit. The single most expensive source was electricity imported from Iran: a small volume, but priced at Rs41.09 per unit, the highest in the entire portfolio.
Nepra has scheduled a public hearing for September 29 to weigh whether the adjustment should be approved and applied uniformly across all distribution companies, including K-Electric in Karachi. The fuel charges adjustment mechanism was designed to protect consumers from erratic month-to-month swings, but its practical effect is to pass cost increases downstream when generation expenses climb. The hearing will ultimately test whether regulators are willing to absorb some of that burden — or whether it will fall, as it so often has, on households with little room left to adjust.
Pakistan's electricity consumers are bracing for higher bills come October. The Central Power Purchasing Agency-Guarantee, the state entity that purchases power on behalf of the country's distribution companies, has asked the National Electric Power Regulatory Authority to approve an additional charge of Rs0.1911 per unit. The request hinges on a gap between what the government budgeted for fuel costs in August and what power plants actually charged to generate electricity that month.
The numbers tell the story of a system under strain. In August, Pakistan's power plants produced 14,218 gigawatt hours of electricity at a total cost of Rs103.4 billion. The reference fuel charge—the amount consumers were already paying for—was set at Rs7.3149 per unit. But the actual cost of generation averaged Rs7.5059 per unit. That difference, multiplied across millions of households and businesses, adds up to real money that the agency says must be recovered. Under the fuel charges adjustment mechanism, this gap gets passed to consumers the following month.
The composition of Pakistan's power mix reveals why costs have climbed. Hydropower, which requires no fuel, dominated the August supply, generating nearly 39 percent of the total at no cost. Nuclear plants contributed 15 percent at a modest Rs2.19 per unit. But the expensive sources tell a different story. Liquefied natural gas plants, which Pakistan relies on heavily, produced 2,180 gigawatt hours at Rs21.73 per unit—nearly ten times the cost of nuclear power. Coal, both local and imported, made up 18 percent of the mix. Imported coal cost Rs14.07 per unit, while locally mined coal ran Rs12.01. Indigenous gas supplied 7.3 percent at Rs13.43 per unit. The most expensive source was electricity imported from Iran: just 78 gigawatt hours, but at Rs41.09 per unit, the highest price in the entire generation portfolio.
The regulatory authority has scheduled a public hearing for September 29 to decide whether to approve the adjustment. If approved, the increase will apply uniformly across all distribution companies, including K-Electric, the private utility serving Karachi. The mechanism is designed to insulate consumers from month-to-month volatility in fuel costs, but it also means that when generation costs spike, bills follow. The question now is whether regulators will accept the agency's argument that the gap must be closed, or whether they will push back against passing the full cost to households already struggling with inflation.
For millions of Pakistanis already cutting back on electricity use to manage their budgets, the prospect of another increase in October adds to the weight of rising living costs. The hearing will determine not just the size of the adjustment, but whether the government's energy policy can sustain itself without continuously shifting costs downstream to consumers who have little choice but to pay.
Notable Quotes
Reference fuel charges for August were Rs7.3149 per unit, while actual cost averaged Rs7.5059 per unit— Central Power Purchasing Agency-Guarantee petition to Nepra
The Hearth Conversation Another angle on the story
Why does Pakistan need this fuel cost adjustment at all? Can't the government just set one price and stick to it?
Because fuel costs move constantly. In August, power plants had to buy liquefied natural gas at one price, coal at another, and some electricity from Iran at yet another. The government can't predict those costs months in advance. So they set a reference price, and then adjust it monthly when reality doesn't match the forecast.
But that means consumers bear all the risk. If fuel gets expensive, they pay more. If it gets cheap, do they pay less?
In theory, yes. The adjustment works both ways. But in practice, Pakistan's energy mix is expensive right now—RLNG plants, imported coal, imported electricity from Iran. Those costs don't come down easily. So adjustments tend to go up more often than down.
What's driving the cost in August specifically? Is it just bad luck with fuel prices?
Partly. But also structure. Hydropower was cheap that month because there was water in the dams. Nuclear was cheap because it always is. But the country still needed liquefied natural gas and imported electricity to meet demand. Those sources are expensive by nature. Until Pakistan builds more cheap generation—more hydro, more solar, more nuclear—it will keep hitting consumers with these adjustments.
So this isn't a one-time thing. This is the new normal?
Unless something changes in how Pakistan generates power, yes. The fuel cost adjustment will keep appearing in bills. The question is how large it will be each month.