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Pakistan’s July Fuel Cost Adjustment and Its Impact on Electricity Pricing

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In recent months, Pakistan has faced substantial issues in its energy industry, particularly in terms of electricity costs. The Fuel Cost Adjustment (FCA) for the month of July, amounts to Rs.1.463 per kilowatt-hour (kWh), has alarmed consumers across the country.

The FCA will be applied to all consumer categories, with two major exceptions: electric vehicle charging stations and lifeline consumers, according to Nepra’s announcement. This modification will be clearly stated on consumers’ September bills, with the computation based on the units billed to them in July.

 In order to put this in perspective, it is important to keep in mind that the electricity regulator already hiked the national average tariff by about Rs. 5 per unit in July. The base unit power cost increased significantly as a result of this increase, going from Rs. 24.82 to Rs. 29.78, placing severe financial hardship on many households and companies.

Additionally, the government’s decision to increase the price of electricity by Rs.3.55 per unit on August 22 only helped fuel consumers’ growing resentment. Because of this, a sizable segment of the populace has protested.

The reaction of caretaker Prime Minister Anwaarul Haq Kakar to the outrage aroused eyebrows. Initially, he dismissed the topic as a “non-issue,” implying that some political parties were using it as a “tool” in their election campaigns. 

However, the interim information minister later clarified that certain sections of the media had misreported the caretaker PM’s words and that he did not dismiss the subject as a non-issue.

The present energy pricing issue in Pakistan has ramifications for consumers, industry, and the political environment, highlighting the critical need for transparent and equitable energy pricing systems that include people’s economic well-being.

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