Prime Minister Shehbaz Sharif has given the relevant instructions to the Power Division to make reduction in electricity tariffs by Rs. 7 per unit for all categories of consumers in the country. This move is made to provide relief to the masses. The decision follows consultations with the International Monetary Fund and was reported by Business Recorder.
The initiative is the part of the Gov plan to highlight skyrocketing energy costs, which is the reason for increasing financial load on consumers and other businesses alike. To drive this plan forward, the Prime Minister has expanded the “Tariff Reduction Committee,” now headed by Deputy Prime Minister and Foreign Minister Ishaq Dar, emphasizing the government’s commitment to implementing this much-needed relief.
The committee has been given the task of finalizing the tariff reduction plan by February 10, 2025, and the execution of this is set to commence on April 1, 2025. A multi-pronged strategy will be used to achieve the target of Rs. 7 per unit reduction. This includes renegotiated agreements with independent power producers (IPPs), contributing Rs. 2 per unit, the removal of federal and provincial taxes (Rs. 3 per unit), and reduced Return on Equity for government-owned power projects.
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Currently, electricity bills are heavily burdened by taxes and surcharges, which account for a staggering 40 percent of the total cost—approximately Rs. 964 billion. Of this, Rs. 391 billion is collected by the federal government, while provinces contribute Rs. 563 billion. The Finance Division has expressed reservations about removing these taxes, citing concerns over meeting fiscal targets and maintaining revenue collection, especially under the IMF’s $7 billion bailout program.
The decision also includes closing legal proceedings against independent power producers accused of earning abnormal profits, signaling a cooperative approach to revising agreements and reducing costs.
Millions of Pakistanis are grappling with high electricity bills, this initiative offers a glimmer of hope. If implemented effectively, the tariff reduction could ease financial pressures on households and boost economic activity, underscoring the government’s commitment to addressing public concerns.