Latest news with #Rs1.55
Business Recorder
a day ago
- Business
- Business Recorder
Softening inflation – scope for rate cut
Headline inflation finally reversed its trend, rising to 3.5 percent in May 2025 compared to 0.3 percent in the previous month and 11.8 percent in the same period last year. This change is largely driven by the base effect—over the past eleven months, a high base effect contributed to lowering the headline number. Now, with the full cycle complete, the low base effect has come into play, pushing inflation upward. However, due to negative month-on-month (MoM) inflation in six out of the past twelve months, the increase in inflation—despite the base effect reversal—remains below the SBP's medium-term target range of 5 to 7 percent. It is likely to stay under 5 percent for the remainder of the calendar year. In May, on abasis, month-on-month basis, inflation declined by 0.2 percent. This was driven by falling prices in food (-0.2%), transport (-0.2%), recreation and culture (-4.7%), and housing and utilities (-1.2%). These declines more than offset increases in clothing (1%), education (0.7%), and miscellaneous categories (1.7%). One of the most notable declines was seen in electricity charges. May marked the seventh consecutive month of falling electricity prices, with a 7.0 percent drop. This decrease is due to the implementation of a negative Rs1.55/kWh Quarterly Tariff Adjustment (QTA) for 3QFY25, which began in May, adding to the existing Rs1.9/kWh QTA. Within the food category, falling wheat prices had a significant downward impact—dropping 7.3 percent MoM. This decline also reduced the prices of wheat flour and wheat-based products and had a cascading effect on other food items. Additionally, prices of perishable items like tomatoes and onions also saw notable declines. Core inflation, however, has not declined at the same pace. It stood at 7.8 percent in May (urban core: 7.3%, rural core: 8.8%) compared to 8 percent in April and 14.2 percent in May last year. The overall decline in inflation is primarily due to falling food prices—partly because of the absence of a wheat support price—and to a broader decline in global commodity prices. Energy prices, particularly fuel and electricity, are also decreasing, supported by a stable currency amid the global commodity price downturn. However, second-round effects of the earlier inflation surge are still in play. As a result, categories like health, education, and miscellaneous remain in double digits, and clothing and footwear are approaching that threshold due to seasonal Eid-related demand pressures. A divergence between urban and rural inflation is emerging. In May 2025, urban food inflation stood at 5.3 percent compared to just 2.1 percent in rural areas. Conversely, in non-food categories, urban inflation was 2.4 percent while rural inflation was 4.6 percent. Despite these differences, the overall headline inflation rates were similar: 3.5 percent in urban areas and 3.4 percent in rural areas. Demand-side pressures and economic activity levels vary across regions. Overall, headline inflation for the first eleven months of FY25 (11MFY25) averaged 4.6 percent, a sharp decline from 24.5 percent during the same period last year. The trend is expected to remain steady, and barring any external or climate-related shocks, inflation is projected to stay below 5 percent in 2025. This gives the SBP room to further cut interest rates.
Business Recorder
13-05-2025
- Business
- Business Recorder
Power tariffs: Summer relief extends
The summer season of massive relief continues for electricity consumers, as another Rs1.55/unit cut in lieu of Quarterly Tariff Adjustment (QTA) has been notified by the regulator. The QTA for 3QFY25 will be in field for May, June and July QTA for May and June will be in addition to the 2QFY25 QTA amounting to Rs1.9/unit – that is already in place till June 2025. The combined relief over March 2025 now stands at Rs6.2/unit for protected category slabs, and nearly Rs5/unit for unprotected. The impact includes negative monthly fuel charges adjustment of Rs1.18/per unit, of which Rs0.9 is the temporary adjustment that will last another month. The standalone monthly FCA at Rs0.28/unit for May 2025 is the lowest since September 2024, as deviations with reference generation have increased of late – largely owing to reduced hydrology and increased reliance on RLNG. The tariff composition has a number of temporary relief heads when compared with March 2025. This is what is in field. Tariff Differential subsidy (TDS) of Rs1.71/unit for April-June, 2QFY25 QTA of negative Rs1.9/unit for Apr-Jun, 3QFY25 QTA of negative Rs1.55/unit for May-July, FCA retention relief of negative Rs0.9/unit for Apr-Jun, and Rs0.28/unit on account of monthly FCA for May 2025. The base tariff, surcharges, duties, and taxes, meanwhile, have remained unchanged. From a year ago, the tariff respite is rather considerable, ranging from 9 percent to 48 percent across various slabs. Effective tariffs are down Rs8/unit for protected and nearly Rs6/unit for unprotected consumers year-on-year. Interestingly, the effective tariff for the non-lifeline protected consumer in the lowest category is now lower than the lifeline consumer's highest slab. The difference is marginal, and temporary – as non-lifeline consumers do not get the benefit of periodic adjustments, which have been rather significant of late. Nearly half of the capacity charges reduction for 3QFY25 stemmed from the impact of termination of 5 plants, and renegotiated terms with a number of IPPs. A considerable portion owes to the impact of closure of Neelum Jhelum power plant – which may have led to some savings on account of capacity charges but is a net negative for the sector – as no contribution will lead to a visibly altered reference generation mix for the next annual tariff rebasing exercise. Early signs indicate FY26 base tariffs will be a tad lower or at pat with FY25, and periodic adjustments are expected to be much lower, given the impact of IPP negotiations and terminated contracts will likely be built in the revised Power Purchase Price (PPP) for FY26. All eyes are now on the hydel flows which will be key in keeping power tariffs within close proximity of base tariffs for FY26.
Express Tribune
10-05-2025
- Business
- Express Tribune
Consumers pay Rs69b for idle plants
Listen to article The inefficiencies in the country's electricity transmission system have burdened consumers with capacity payments of Rs69 billion in the quarterly tariff adjustment (QTA) for ex-Wapda distribution companies (DISCOs) for the third quarter of financial year 2024-25. Three power plants had been operating at lower capacity during the period under review, but they received Rs69 billion in capacity payments, which the electricity consumers had to pay. National Electric Power Regulatory Authority (Nepra) Member (Technical) Rafique Ahmad Shaikh has pointed out inefficiencies in the country's transmission system due to which Rs69 billion was paid to three coal-fired plants in capacity charges despite extremely low utilisation. He submitted these comments in his additional note on the QTA for the third quarter of 2024-25, in which a reduction of Rs1.55 per unit was allowed to refund Rs52.6 billion to the consumers of DSICOs and K-Electric (KE) in the bills for May, June and July 2025. According to him, transmission constraints continue to limit the utilisation of several cost-effective power plants located in the southern region, notably Port Qasim, China Power and Lucky Electric. Despite their potential to provide affordable electricity, these plants reported extremely low utilisation factors – approximately 1% for Port Qasim, 10% for China Power and 0% for Lucky Electric – during the quarter. Nevertheless, they claimed substantial capacity payments amounting to Rs26.95 billion, Rs30.88 billion and Rs11.26 billion, respectively. In total, around Rs69.09 billion was claimed in capacity charges despite minimal generation. This reflects a major inefficiency in the system and underscores the urgent need to address transmission bottlenecks and improve generation dispatch practices to ensure the optimal use of the available low-cost generation resources. It is noted that the capacity claimed by DISCOs for the third quarter of FY 2024-25 amounted to Rs362.395 billion, which was significantly lower than the reference figure of Rs459.286 billion. During the same period, electricity sales stood at 19,968 gigawatt hours (GWh) compared to reference sales of 21,846 GWh in the corresponding period. Ordinarily, a decline in electricity sales would result in an upward adjustment in capacity charges due to the fixed-cost nature of capacity payments. However, during this quarter, the termination of certain power purchase agreements (PPAs) and other adjustments related to the independent power producers (IPPs) operating within the system have contributed to a reduction against the projected capacity payment. Consequently, this led to a negative adjustment in the third quarter of FY 2024-25. Although the quarterly adjustment for the third quarter decreased significantly, he said that enhanced governance and more efficient system operations could have further improved electricity sales, potentially leading to an even greater reduction in the adjustment amount. In that regard, several key observations were highlighted for consideration and focused action by the relevant stakeholders. Genco-II (Guddu old), Genco-III (TPS Muzaffargarh) and Genco-I (Jamshoro Power Company) collectively claimed capacity payments of Rs1.237 billion during the quarter – Rs469 million, Rs350 million and Rs418 million respectively – despite generating no electricity during the period. These plants are characterised by high generation costs and poor operational efficiency, with little-to-no likelihood of receiving dispatch orders from the system operator in the future, given the availability of abundant and more cost-effective surplus capacity in the system. Continuing capacity payments to such non-operational and inefficient assets imposes an unnecessary financial burden on both the power sector and end consumers. A targeted and strategic review is, therefore, essential to rationalise these expenditures and improve the overall sector efficiency.
Express Tribune
10-05-2025
- Business
- Express Tribune
Power tariff further slashed by Rs1.8/unit
Electricity prices have been reduced by a total of Rs1.83 per unit. This reduction has been made under monthly and quarterly adjustments. According to a notification issued by the National Electric Power Regulatory Authority (Nepra) on Friday, a reduction of Rs0.28 per unit has been applied under the monthly fuel adjustment. A further reduction of Rs1.55 per unit has been made on a quarterly basis. The Rs0.28 per unit reduction will apply for the current month. The Rs1.55 per unit reduction will be effective for three monthsMay, June, and July. The Express Tribune reported on March 29 that a reduction in power tariff by up to Rs1.71 per unit for all consumers of power distribution companies (DISCOs) and K-Electric (KE) for the next three months was expected as part of a tariff relief plan. Sources said Nepra was set to allow the increase in the tariff differential subsidy (TDS) by Rs1.71 for all consumers for the months of April, May and June. They added the reduction would be part of the plan to reduce power tariff by up to Rs6 per unit. The federal cabinet in its meeting on March 26 approved the increase in the TDS for all consumers, except the lifeline domestic users, by Rs1.71 per kilowatt hour (kWh) for April-June quarter of the current fiscal year, in line with efforts to reduce consumer-end tariffs and improve demand.
Express Tribune
09-05-2025
- Business
- Express Tribune
Govt cuts electricity tariff by Rs1.83 per unit
Listen to article The government has announced a reduction in electricity prices through fuel and quarterly tariff adjustments, with the National Electric Power Regulatory Authority (NEPRA) issuing a formal notification on the revised rates, Express News reported on Friday. According to NEPRA's notification, the electricity tariff has been reduced by a total of Rs1.83 per unit. The decrease includes a Rs0.28 per unit cut under the monthly fuel adjustment and a Rs1.55 per unit reduction under the quarterly tariff adjustment mechanism. The Rs0.28 per unit decrease under the fuel adjustment will be applicable for the current month, providing immediate relief to consumers. Meanwhile, the Rs1.55 per unit reduction under the quarterly adjustment will be implemented over the three-month period from May to July 2025, as outlined in NEPRA's notification.
