ISLAMABAD:In a significant relief measure for electricity consumers, Prime Minister Shehbaz Sharif announced a 15% reduction in power tariffs, amounting to Rs7.41 per unit. He also pledged further reforms to ease the financial burden on households and industries through structural changes in the energy sector.
The tariff reduction, aimed at increasing power consumption from the national grid, is expected to benefit approximately 40.3 million consumers, including 35 million residential users. The announcement was made at a ceremony at the Prime Minister’s Office, attended by individuals from various sectors.
According to government officials, the reduction stems from quarterly tariff adjustments, lower monthly fuel cost adjustments, a decrease in taxes, and an increase in petroleum-funded subsidies. Specifically, Rs3.40 per unit has been reduced through tariff adjustments, nearly Rs1 per unit from lower fuel costs, and Rs1.71 per unit by increasing subsidies. The total impact, including tax adjustments, will amount to Rs7.41 per unit.
As a result, domestic electricity rates have dropped by Rs7.41 per unit, bringing the new average price to Rs34.37 per unit. For industries, tariffs have been lowered by Rs7.69 per unit, reducing the rate to Rs40.51 per unit.
The prime minister acknowledged the challenges in securing this relief, stating that his administration had to negotiate extensively with the International Monetary Fund (IMF), which was initially unwilling to approve even budget-neutral reductions in electricity prices.
“The IMF was reluctant to allow any tariff reductions, even if they were offset by adjustments in petroleum levies. I had to personally intervene and speak with the IMF Managing Director to secure approval, as these changes had no negative impact on the budget,” he said.
The most significant relief has been granted to commercial consumers, with a 12% reduction of Rs8.58 per unit, and industrial consumers, who will see a 13% cut of Rs7.69 per unit. Household consumers will experience a reduction ranging from Rs6.14 to Rs6.71 per unit, equating to a 17% to 32% decrease.
Prime Minister Shehbaz credited Power Minister Sardar Awais Leghari, Privatisation Adviser Muhammad Ali, and National Coordinator of the PM’s Task Force on Power Sector Lt. General Zafar for their efforts in renegotiating agreements with power plant operators.
Under the new structure, lifeline consumers using up to 100 units per month will not see any reductions, as their current rates are already below generation costs. However, protected residential consumers using up to 100 units will receive a Rs6.14 per unit reduction, bringing their tariff down to Rs8.52 per unit—a 32% decrease.
Consumers using up to 200 units will benefit from a Rs6.14 per unit reduction, setting their new rate at Rs11.51 (excluding taxes). Those consuming up to 300 units will see a Rs7.14 per unit decrease, with a final rate of Rs34. For households exceeding 300 units, the relief amounts to Rs7.24 per unit, setting the new tariff at Rs48.46 per unit.
On average, domestic electricity prices have been reduced by Rs6.71 per unit, bringing the new rate to Rs31.63, a 17% decrease.
Acknowledging the financial strain on consumers, the prime minister admitted that high electricity bills had caused distress among the public, particularly pensioners. He emphasized that the government was committed to further structural reforms to bring additional relief to both households and industries.
“This reduction will enable industries to produce more competitively priced goods,” he added.
For commercial consumers, the revised tariff is Rs62.47 per unit, reflecting a 12% decrease, while industrial consumers will now pay Rs40.51 per unit after a 13% reduction of Rs7.69 per unit. The agricultural sector will benefit from a Rs7.18 per unit cut, bringing the new rate to Rs34.58 per unit.
The prime minister outlined the next steps for reforming the power sector, instructing his team to address annual losses exceeding Rs600 billion caused by electricity theft and poor bill recovery.
Additionally, the government plans to establish an open electricity market and either privatize or transfer power distribution companies (DISCOs) to provincial control to minimize losses and curb power theft.
Commending the task force for its efforts, the prime minister noted that their innovative strategies helped secure IMF approval for tariff reductions.
“We chose not to pass on the benefits of lower international petroleum prices to consumers but instead used them to facilitate power tariff reductions, a move that was accepted by the IMF,” he explained.
He further revealed that negotiations with Independent Power Producers (IPPs) had resulted in projected savings of Rs3.7 trillion over the next three to 25 years, depending on the lifespan of these agreements.
Addressing the country’s financial challenges, he noted that efforts were underway to eliminate the Rs2.4 trillion circular debt within five years.
Reflecting on the economic crisis faced by Pakistan a year ago, the prime minister stated that the country was on the brink of default, with difficulties in securing letters of credit for essential imports.
“We lacked resources to sustain the power sector, but now, our economy has stabilized and is moving toward sustainable growth,” he asserted.
He emphasized that Pakistan’s economy required fundamental structural changes to overcome longstanding challenges and achieve long-term stability.
