Pakistan power sector audit has emerged as a major demand from industrial consumers, who have called on the federal government to appoint an independent third party to verify electricity generation costs, tariff calculations and other regulatory data. The Korangi Association of Trade and Industry (KATI) has urged the government to suspend the proposed two-part electricity tariff until an independent audit is completed, arguing that discrepancies in power sector calculations could be transferring the financial burden of subsidised electricity packages onto ordinary consumers.
In formal communications to senior government officials, KATI President Shaikh Umer Rehan called for immediate intervention to address concerns surrounding the revised Incremental Consumption Package (ICP), a special electricity pricing arrangement introduced for industrial and agricultural consumers. The association maintains that the package, originally designed to encourage additional electricity consumption without burdening other consumer categories, is now creating financial complications because of discrepancies between the approved rates and the actual cost of supplying incremental electricity.
The demand comes amid growing concerns over electricity prices, industrial competitiveness and transparency in Pakistan’s power sector. Industrial consumers argue that decisions concerning electricity tariffs must be based on independently verified data rather than incomplete calculations that could ultimately increase costs for businesses and households.
Pakistan Power Sector Audit Sought Over Incremental Consumption Package
At the centre of the controversy is the government’s Incremental Consumption Package, approved by the National Electric Power Regulatory Authority (NEPRA) on December 9, 2025, at a rate of Rs22.98 per kilowatt-hour. The initiative was introduced to encourage industrial and agricultural consumers to increase their electricity consumption from the national grid.
The underlying principle was that consumers benefiting from the package would pay at least the actual marginal cost of the additional electricity supplied to them. Any additional financial burden arising from the arrangement was supposed to remain ring-fenced, meaning that consumers outside the programme would not be required to subsidise its beneficiaries.
However, NEPRA revised the incremental consumption rate to Rs25.30 per unit in its November 6, 2026 decision, following a review of the package. KATI has questioned the calculations underlying this revision, arguing that the approved rate does not adequately reflect the actual marginal cost of electricity generation.
According to the association, NEPRA’s calculations placed the marginal cost at approximately Rs31.83 per unit, which declined to Rs29.65 after incorporating operational adjustments provided by the Independent System and Market Operator (ISMO).
KATI argues that the difference between the revised package rate and the actual cost of electricity could contribute to higher Fuel Cost Adjustments (FCAs), ultimately affecting electricity consumers across different categories.
The association maintains that the government must establish the accuracy of these calculations before introducing further tariff arrangements or allowing additional costs to be recovered from consumers who are not benefiting from the package.
KATI Demands Independent Third-Party Audit of Power Sector Data
In its letters to Power Minister Awais Khan Leghari, Commerce Minister Jam Kamal Khan, Special Assistant to the Prime Minister on Energy retired General Muhammad Zafar Iqbal and NEPRA Chairman Waseem Mukhtar, KATI called for the appointment of one of the country’s major accounting firms to conduct an independent assessment.
The proposed Pakistan power sector audit would examine the data, modelling inputs and procedures used by the Power Planning and Monitoring Company (PPMC) and ISMO. KATI specifically called for an examination of PLEXOS, an electricity market simulation and forecasting software used to model power generation, dispatch and associated costs.
The association argued that the audit should be supported by specialists with expertise in power sector modelling to ensure that the calculations accurately reflect the costs associated with incremental electricity consumption.
It also requested that the resulting report be shared with NEPRA and other relevant stakeholders to improve transparency and allow industrial consumers to assess the basis of electricity tariff decisions.
The demand follows concerns raised in NEPRA’s November 6 decision regarding the quality and completeness of information supplied by the Power Division and its associated organisations. The regulator’s review highlighted shortcomings in the data and marginal-cost analysis required to determine whether the incremental consumption package was financially sustainable.
For industrial consumers, independent verification is essential because electricity pricing directly affects production costs, investment decisions and the competitiveness of Pakistani businesses.
NEPRA Raises Concerns Over Missing Electricity Cost Data
The controversy has been intensified by delays and deficiencies in the information submitted to NEPRA during the mandatory review of the Incremental Consumption Package.
Under the original arrangement, a semi-annual review was required after May 31, 2026, to determine whether the approved rate remained aligned with the actual cost of supplying additional electricity.
NEPRA wrote to the Power Division on June 16 seeking the necessary information. However, the data submitted on July 29 reportedly did not include the required marginal-cost analysis.
On September 9, the Power Division requested that NEPRA conduct the review itself. The regulator subsequently examined the available information, but a further submission dated October 15 also failed to provide the specific analysis and recommendations requested, according to NEPRA’s November 6 decision.
The regulator’s assessment estimated the marginal electricity cost at approximately Rs31.83 per unit. After incorporating certain operational tags supplied by ISMO, the estimate declined to Rs29.65 per unit.
Nevertheless, these figures did not constitute a final determination of the actual historical marginal cost attributable exclusively to incremental consumption. Further technical analysis and complete supporting information were required to establish the precise cost.
The shortcomings have raised concerns about the reliability of the calculations used to determine the revised electricity package and the potential consequences for consumers.
Industrialists Question Rs180 Billion Power Tariff Shortfall
Beyond the proposed audit, KATI has raised concerns about an estimated Rs180 billion shortfall between the average electricity tariff and the Incremental Consumption Package.
The association has argued that this financial gap should be addressed through a meaningful reduction in industrial electricity tariffs rather than recovered from ordinary consumers.
It has specifically called for electricity rates across the B1 to B4 industrial consumer categories to be brought in line with the cost of service determined by NEPRA.
According to KATI, the existing arrangement risks shifting the financial consequences of an inadequately structured electricity package onto consumers who were never intended to bear its costs.
The association has also requested full disclosure of the amounts recovered through Fuel Cost Adjustments on account of the incremental consumption initiative. Such disclosure, it argues, would allow stakeholders to understand how the financial implications of the package have been distributed across different consumer categories.
KATI President Shaikh Umer Rehan further called for the deferral of any two-part electricity tariff until the underlying power sector modelling has been independently audited and its findings shared with stakeholders.
Electricity Tariff Reform and the Burden on Ordinary Consumers
The dispute over the Incremental Consumption Package highlights broader challenges facing Pakistan’s electricity sector, particularly the relationship between industrial tariff relief, generation costs and the distribution of financial liabilities.
Industrial electricity prices have remained a significant concern for businesses, with high energy costs affecting production expenses and the competitiveness of domestic manufacturers. Government initiatives intended to encourage greater grid consumption have therefore been viewed as an important part of efforts to support industrial activity.
However, such incentives must be financially sustainable. If the cost of providing discounted electricity is not accurately calculated, the resulting shortfall could create additional pressure on the wider electricity tariff structure.
This is particularly concerning for households and businesses that do not qualify for special electricity packages but may still be affected by adjustments in the broader power sector.
The disagreement also highlights the importance of transparency in the institutions responsible for electricity planning and regulation. Reliable data, independent verification and timely regulatory reviews are necessary to ensure that tariff decisions reflect actual generation costs and do not create unintended financial burdens.
Independent Audit Could Determine Future of Pakistan’s Electricity Tariffs
KATI’s demand for a third-party audit places renewed pressure on the government and relevant power sector institutions to address questions surrounding the Incremental Consumption Package.
The proposed audit is intended to establish whether the modelling assumptions, operational data and cost calculations used in determining electricity rates accurately represent the financial implications of incremental consumption. Its findings could also help clarify whether the current arrangement is consistent with the original commitment that non-beneficiary consumers would not bear its additional costs.
For now, the association wants the government to defer the proposed two-part tariff until the relevant information has been independently verified and made available to stakeholders.
The wider issue extends beyond the immediate dispute between industrial consumers and power sector regulators. Pakistan’s ability to maintain affordable electricity, support industrial growth and protect ordinary consumers depends on transparent tariff-setting mechanisms and credible financial assessments.
Ultimately, the demand for a Pakistan power sector audit reflects a broader call for accountability in electricity pricing. Without reliable data and independent verification, efforts to provide industrial tariff relief risk creating new financial pressures elsewhere in the system. Ensuring that electricity costs are accurately calculated and fairly distributed will therefore remain essential to meaningful power sector reform.
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