Govt expected to cut electricity tariff by Rs8 per unit

ISLAMABAD: Prime Minister Shehbaz Sharif is expected to announce a reduction of up to Rs8 per unit in electricity tariffs on March 23, pending final approval from the International Monetary Fund (IMF).

The revised rates are likely to come into effect from April 1, 2025, with consumers expected to see lower bills by May, according to sources.

Reports suggest that out of the Rs8 per unit reduction, Rs4.73 per unit could be a permanent cut.

This may be achieved by scrapping agreements with six Independent Power Producers (IPPs), restructuring deals with 16 IPPs under a “take and pay” model, converting payments for bagasse-fueled power plants from US dollars to Pakistani rupee, and reducing the Return on Equity (RoE) for government-owned power plants to 13 per cent, with the dollar exchange rate capped at Rs168.

An additional Rs1.30 per unit relief could be provided due to the government’s decision to maintain petroleum product prices, despite a decline in international rates.

This move is estimated to save Rs168 billion, which would be redirected to ease electricity costs. However, this relief is expected to be temporary, lasting for only one month.

The IMF has reportedly supported the government’s decision to provide relief, potentially up to Rs250 billion, depending on how global oil prices fluctuate in the coming months.

Earlier in March, Prime Minister Shehbaz had opted to keep petrol prices unchanged for two weeks, with the intention of using savings from lower international oil prices to provide relief on electricity tariffs instead. The government aims to transfer the full financial benefit of this decision to consumers through reduced energy costs.

A statement from the Prime Minister’s Office on March 15 hinted at the government’s strategy to prepare a comprehensive plan to lower electricity prices, with final details expected soon.

The Prime Minister is expected to address the nation on March 23 to outline the anticipated relief package, which could provide much-needed respite to consumers burdened by rising energy costs.

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