• PM-ordered inquiry confirms widespread overbilling in Lahore; officials penalised
• Power division says electricity duty cannot be abolished without provincial consent
• Industrial consumers complain of 14pc tariff hike, rising system losses, eroding competitiveness
ISLAMABAD: Confirming widespread overbilling and subsequent punitive action against relevant electricity officials in Lahore following a probe ordered by Prime Minister Shehbaz Sharif, the Power Division on Monday said the federal government cannot abolish electricity duty — as announced by the power minister — without the consent of the provincial governments.
Testifying at a public hearing held by the National Electric Power Regulatory Authority (Nepra), Additional Secretary for Power Mehfooz Bhatti reported that an inquiry ordered by the prime minister into overbilling complaints against Lahore Electric Supply Company (Lesco) had been completed and action had also been taken against those responsible.
Mr Bhatti said the inquiry report had been submitted to the prime minister and, hence, he would refrain from discussing the matter until its recommendations were processed through relevant channels and formally presented before the regulator.
This statement led various consumers to raise concerns about similar overbilling practices in other power companies and demanded through probes.
The regulator had called the public hearing on the request of ex-Wapda distribution companies (Discos) seeking a negative quarterly adjustment of Rs1.80 per unit to refund about Rs53.4 billion to consumers for three billing months — August to October. The refund stems from savings in capacity payments during the fourth quarter (April-June) of FY2025.
Nepra member from Sindh, Rafique A. Shaikh, reminded Mr Bhatti that overbilling investigations by a team of the regulator some two years had found massive discrepancies but was confronted by the power division at the time. However, a subsequent inquiry ordered by power division itself found even greater instances of overbilling. Responding to a question, Mr Shaikh noted that Nepra had arranged refund of the overbilled amounts to the consumers.
He also reported that Power Minister Sardar Awais Leghari had earlier last month announced that he had written to the provincial governments about the centre’s intentions to remove electricity duty from July 1, 2025 and requested provinces to make alternative arrangements.
He added two provinces have responded so far to the proposal while two others were yet to get back with their feedback but “we cannot discontinue electricity duty” unless all provinces agree.
The regulator was informed that about 128,000 applications for new connections were pending beyond permissible deadlines with various distribution companies, potentially delaying the absorption of around 1,070MW of generation capacity.
Additionally, about 4,000 net-metering applications are also pending beyond regulatory timelines with Faisalabad Electric alone accounting for 2,000 of these. Likewise, more than 70,000 faulty meters had not been rectified, which meant these consumers were being billed based on estimated consumption.
The Power Division further reported that 700–800MW of captive power plants have returned to the national grid due to an increase in gas tariffs following a special levy under the IMF programme. As a result, circular debt has dropped from Rs2.39tr to Rs1.6tr within a year, owing to improved economic indicators, exchange rate stability, reduced interest rates, and efficiency gains by Discos. Overall electricity consumption increased by 1.6 per cent last year, while industrial demand rose by 6.3pc.
Industrial consumers from Karachi and Lahore pointed out that average power rate had increased by 14pc with effect from July 1, a figure also confirmed by the Pakistan Bureau of Statistics.
They stated that a 19pc tariff imposed by the Trump administration on Pakistani products had already burdened the sector, and rising electricity costs further undermined competitiveness against countries like India. They demanded the removal of cross-subsidy costs on industrial consumers — claimed at Rs137bn by industry representatives and Rs73bn by the Power Division.
Despite claims of increased efficiency, industrial users highlighted that system losses have risen to 18.3pc in FY2025, compared to 17.55pc in FY2024 and 16.5pc in FY2023.
The Power Division clarified that the proposed lower quarterly adjustment is due to Rs18bn in savings from reduced capacity payments to the Neelum-Jhelum Hydropower Project (which is currently non-operational), Rs17bn in contract revisions with power plants, and other factors such as declining interest rates and currency stabilisation.
The petition estimated total savings of Rs53.7bn on capacity charges across 10 public-sector Discos. However, increases in operations and maintenance expenses, as well as service and market operation fees, reduced the net savings to Rs53.39bn.
Capacity charges of all Discos had come down during April-June period of current year except for Quetta Electric whose capacity charges went up by Rs3.057bn. Although K-Electric has no contribution in lower quarterly tariff adjustments, its consumers would also benefit the overall quarterly tariff reductions under the government policy of uniform tariff throughout the country.
The highest savings were reported for Faisalabad Electric at Rs15.026bn, followed by Lahore Electric at Rs12.636bn, and Multan Electric at Rs8.48bn. Other notable reductions include Hyderabad Electric at Rs6.63bn, Gujranwala Electric at Rs6.11bn, and Peshawar Electric at Rs3.3bn.
Additional savings include Rs2.88bn for Tribal Electric, Rs1.04bn for Islamabad Electric, and Rs653m for Sukkur Electric.
Under the tariff framework, fuel cost variations are passed on to consumers monthly through an automatic mechanism.
Meanwhile, quarterly tariff adjustments — accounting for changes in power purchase prices, capacity charges, operation and maintenance costs, and transmission/distribution losses — are incorporated into the base tariff by the federal government.
Published in Dawn, August 5th, 2025
