ISLAMABAD: Consumers were eagerly awaiting such news and Power Division of Pakistan came up with that. There won’t be any hike in electricity tariff in the month of June 2026 and consumers will not bear the extra cost of Rs 38 billion due to LNG disruption and furnace oil use.
According to the spokesman from the Power Division, although there had been high pressure on fuel costs such as disruption of supply of natural gas and use of expensive fuel oil as an alternative, the government did not opt for raising the monthly fuel cost adjustment.
Protects Rs38 Billions Worth Consumers Safeguarded from Passing on Fuel Expenses
The scope of the consumer protection offered by the Power Division is important to note. An additional Rs38 billion worth of adjustments for fuel expenses would not be passed on to the electric bills in June. This was clearly presented by the spokesperson as a consumer protection initiative made possible by the combination of several factors.
The electricity price determination system in Pakistan is designed in such a manner that the fuel price is passed to consumers directly via monthly fuel adjustment charges. Any rise in the cost of production, which is what happened when the LNG supply was halted due to the closure of the Strait of Hormuz, is reflected in prices within one or two months.
Factors That Made the Relief Achievable
A representative from the Power Division pinpointed four particular elements that facilitated the implementation of electricity cost protection in June. First, there was policy consistency that ensured decisions without creating unnecessary disruptions to increase generation costs.
Electricity demand being on the rise was the other tool used by the company. More use of electricity means that the fixed costs will be shared by many units, hence lowering the cost of production of electricity per unit.
Rs65 Billion in Quarterly Refunds Paid Already
It is not an isolated effort in terms of relief from the government’s side. The Power Division also revealed that consumers had been paid back a total of Rs65 billion in quarterly refunds for the current period. This relief of Rs1.93 per unit per consumer through quarterly tariffs adjustment fully neutralized the effect of the monthly fuel adjustment surcharge.
That offset is important. Fuel adjustments every month are certainly the most noticeable and most complained about factor of the billing process in Pakistan’s electricity sector. Quarterly offsets completely nullify any impact of fuel adjustments to such an extent that consumers do not pay any extra penny on per unit basis compared to the suggested base reference tariff.
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20 Paisa Relief Per Unit in Next Month Expected
Power Division did not just announce a flat month in June, rather the spokesperson also said that consumers will receive relief of roughly 20 paisas per unit instead of any hike in reference tariff next month.
The deduction of 20 paisa per unit of electricity is insignificant to consider separately. In the context of overall electricity consumption by all the households and businesses in Pakistan, the savings translate into something worthwhile. For higher units of electricity usage, the savings grow proportionately.
The Larger Setting: Fuel Disruptions and the Switch to Coal
The June announcement regarding electricity prices comes in the context of a challenging period in terms of fuel availability, faced by Pakistan’s power producers for several months now. Disruptions in LNG supplies, caused by the closing down of the Strait of Hormuz following the US-Iran disagreement, led to the substitution of furnace oil in place of gas.
Furnace oil is a denser, costlier, and dirtier form of energy compared to natural gas. The transition from one source to the other causes sharp increases in electricity generation cost. This situation arose in Pakistan, resulting in the extra Rs38 billion cost taken up by the Power Division.
Pakistan’s Electricity Prices in June and Its Significance
The decision by the government not to increase electricity prices in June is a clear indication that consumer interests have been given preference over costs that need to be recovered in view of disruption of fuel supplies. While this will have short-term fiscal repercussions, as the Rs38 billion will still have to be dealt with, there will definitely be long-term benefits for consumers.
Furnace oil is a denser, costlier, and dirtier form of energy compared to natural gas. The transition from one source to the other causes sharp increases in electricity generation cost. This situation arose in Pakistan, resulting in the extra Rs38 billion cost taken up by the Power Division.
