The Ministry of Energy (Power Division) is seeking a review of the incremental consumption package introduced for industrial and agricultural consumers following an increase in the cost of electricity.

The National Electric Power Regulatory Authority (Nepra) conducted a public hearing on Monday to review the consumption package. A tariff of Rs22.98 per kilowatt-hour (kWh) had been fixed under the package for industrial and agricultural consumers. The incentive scheme covers industrial and private agricultural electricity consumers across jurisdictions of ex-Wapda power distribution companies and K-Electric. It applies to both Time-of-Use (ToU) and Non-Time-of-Use (N-ToU) consumers as well as covers peak and off-peak incremental electricity consumption.

The Power Division submitted a review motion during the public hearing. According to the presentation, Nepra had approved the package on December 9, 2025. The decision was formally notified on December 10, 2025 to remain in effect for three years. The division argued that there was a significant pressure on the scheme’s tariff of Rs22.98/kWh as average marginal costs exceeded the announced rate over several months. The weighted average marginal cost reached Rs27.58/kWh from December through May. The loss-adjusted marginal cost produced an even higher weighted average of Rs31.83/kWh, according to the Power Division.

The division contended that the average marginal cost hit Rs36.71/kWh during April and remained at Rs33.98/kWh during May. The loss-adjusted cost rose to Rs42.37/kWh in April and Rs39.22/kWh in May.

Until such approval of the power-sector regulator, the difference is being borne by other consumers across the board that creates a central issue for the ongoing semi-annual review.

The package also contains a separate safeguard linked to consumption growth. A review is triggered when combined industrial and agricultural consumption exceeds 25% above the baseline. January recorded a monthly growth of 25.13%, while February registered a rise of 26.20%. April recorded the highest monthly growth of 34.81%. Other months remained below the 25% threshold.

The semi-annual review creates another basis for considering a tariff adjustment. Any decision taken requires reviews to maintain cost-revenue alignment. The Power Division said it also allowed marginal tariffs to be adjusted, when necessary. “The scheme must terminate if upward adjustments become necessary during two consecutive reviews.” The division was required to submit such data after stakeholder consultations. The expected timeline was the first week of June 2026. Instead, raw data was provided to Nepra on July 29, 2026.

After Nepra requested a proposal following consultations, the division responded on September 9 and asked the regulator to kick off proceedings, according to the presentation. The six-month weighted average marginal rate stood around Rs32/kWh and four months had already passed under the second review period. It raised the question about whether the package should be suspended amid continued higher marginal prices. Average tariff comparisons also show different effective break-even prices. For B1 peak consumers, the effective break-even price was Rs31.15/kWh, for B2 Time-of-Use consumers, the break-even price was Rs29.05/kWh and for B3, B4 and B5 categories, the rates were Rs30.03, Rs29.62 and Rs32.91 per kWh, respectively.

The immediate issue is whether the tariff of Rs22.98/kWh reflects current marginal costs. The presentation indicates that actual costs have remained materially higher. Nepra’s hearing will determine whether the rate should go up or suspension should follow. Its outcome will shape the future of the incremental consumption package.

Intervener Rehan Javed called for revising the rate according to the actual marginal cost, effective from June 2026. He also asked for refunding the marginal price charged to non-beneficiary consumers from June 2026. He pleaded to recover it from the beneficiaries at the revised rate and any residue from the government as sponsor of the package.

Amir Sheikh, another intervener, said the package was increasing the cross-subsidy cost for domestic/commercial users, adding that a majority of industries had to cross-subsidise a few large consumers.

“Gas levy has led to captive-grid conversion, so the package is not required,” he said, arguing that resorting to load-shedding and allowing a reduced cost package to industrial and agricultural consumers were self-contradictory. “The only fair and sound decision is to suspend the package,” he said.