By Staff Reporter
ISLAMABAD: Pakistan will eliminate a provincial tax on electricity bills starting July 1, 2025, aiming to simplify charges and lighten the load for consumers battered by soaring power costs.
Federal Minister for Power Awais Leghari has written to the chief ministers of all provinces, notifying them of the decision and seeking their support to untangle the complexity arising from multiple charges, taxes, and duties collected through consumer bills.
The coalition government of Prime Minister Shehbaz Sharif wrestles with providing relief to electricity consumers battered by steep tariffs under an International Monetary Fund bailout program, which limits subsidies in the power sector to curb circular debt.
Just a day earlier, the government took another step toward easing the burden, filing a petition with the National Electric Power Regulatory Authority (Nepra) to slash electricity prices nationwide by Rs1.15 per unit starting July 1, 2025.
The proposed tariff cut targets all but lifeline domestic consumers, aiming to lighten the load on households and businesses amid mounting economic pressures. Rates for lifeline users, those consuming up to 50 units per month at Rs3.95 per unit and those in the 50-to-100-unit bracket at Rs7.74 per unit, will hold steady,
with the Power Division cautioning against changes to these already heavily subsidized slabs. For all other consumers, the flat Rs1.15 per unit reduction, set for the fiscal year 2025-26, promises relief ranging from 3 percent to 10 percent, depending on existing rates.
In his letter to the provincial chief ministers, Leghari underscored the federal government’s broader push to rein in power tariffs, spotlighting efforts like renegotiating contracts with Independent Power Producers (IPPs), trimming the Return on Equity (ROE) for state-owned power plants, and rolling out structural reforms.
He framed the scrapping of provincial electricity duty as a key piece of this puzzle, designed to ensure bills reflect the true cost of power consumption rather than doubling as a catch-all for additional charges.
“High electricity tariffs are already a significant challenge,” Leghari wrote, pointing out that the patchwork of levies tacked onto bills muddies the waters, leaving consumers struggling to decipher and manage their expenses.
“To make electricity bills more transparent and easier to comprehend, the Power Division has decided to discontinue the collection of Electricity Duty through power bills from July 2025,” the letter stated.
The minister urged provincial governments to scout “alternative mechanisms” for collecting their levies and duties, moving away from piggybacking on electricity bills.
He voiced optimism that the shift would not only clarify billing but also ensure “consumers are paying only for the cost of electricity, rather than a mix of other charges.”
“In parallel, we are also committed to simplifying electricity bills so that they primarily reflect the actual cost of power consumption rather than serving as a collection mechanism for various additional charges,” Leghari added, emphasising the government’s focus on transparency.
Leghari pressed the chief ministers to help identify and implement new revenue collection methods to replace the soon-to-be-scrapped duty. He stressed that their cooperation would be critical to making the initiative stick.
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