Govt to Increase Electricity Tariff Rates

The Cabinet Committee on Energy held a press conference on Power Sector here today announcing that the electricity tariff will be increased by Rs. 1.95 per kilowatt-hour (kWh).

The gas supply to industrial captive power plants having electricity connection will be suspended from February 1, 2021, while for export-oriented industries the suspension will become effective from March 1, 2021, members of the committee said.

The industrial units with no electricity connection will get the new connection by December 2021.


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In addition, approximately 3,000 MW of new connections in distribution companies are pending at the moment and the process is expected to be expedited, it was announced during the conference.

Furthermore, agreement with independent power plants (IPPs) is expected to be finalized in the next few days. The committee announced that Rs. 450 billion will be paid in a year to clear the circular debt.

This will lead to expect savings of Rs. 836 billion in the next 20 years amid revision of power purchase agreements with the IPPs.

Tariff of government-owned power plants including RLNG, Nuclear and Thermal (approx. 8,000MW) will also be reduced (by around 30 percent to 70 percent), which will result in expected savings of Rs. 6 trillion, as well as an estimated reduction in power tariff by Rs. 1- 2 per kWh in the longer run.


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The competitive Trading Bilateral Contract Market (CTBCM) market is also likely to be developed within 2-3 years with 20 percent penetration at the wholesale level and then gradually to the retail segment.

Total 3,500 MW of government-owned old power plants will be decommissioned, it was announced, along with the details that in the first phase 1,800 MW will be decommissioned.

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