By Staff Reporter
ISLAMABAD: The government reduced electricity tariffs by as much as Rs7.69 per unit, the largest cut in years, as Prime Minister Muhammad Shehbaz Sharif seeks to boost the country’s sluggish economic growth.
The move, which brings the total reduction in electricity prices to Rs10.91 per unit for residential consumers and Rs17.99 per unit for industrial consumers since June 2024, aims to alleviate the burden of expensive power on businesses and households.
“For residential consumers, we have decided to reduce the electricity rates by Rs7.41 per unit, after which electricity will be provided at Rs34.37 per unit,” Sharif said in a ceremony in Islamabad, the capital. “Similarly, for commercial users, we have decided to reduce the electricity rates by Rs7.59 per unit.”
“We will further reduce electricity prices in the future.”
Pakistan’s economy has been struggling with a crippling energy crisis. The government has introduced measures to reduce power costs, including renegotiating contracts with independent power producers and selling off state-owned power plants. The reduction in electricity tariffs is expected to provide relief to industries, which have been struggling with high energy costs. Pakistan’s industrial sector accounts for about a quarter of the country’s GDP.
Thursday’s announcement marks the second reduction in electricity prices since June 2024, when the government cut power tariffs by Rs3.5 per unit.
“Unless we significantly cut electricity rates, Pakistan’s industry, agriculture, trade or exports cannot grow,” Sharif said.
Sharif said, the tariff cut met conditions set by the International Monetary Fund and maintained compliance with its guidelines.
“We need to honour the conditions inked with the IMF,” the prime minister said. “This decision will enable our industries to compete internationally.”
The IMF allowed the government to reduce electricity tariffs by Re1 per kilowatt-hour for all consumers last month, financed through revenue collected from levies imposed on captive power plants.
The prime minister also announced plans to sell idle and outdated government power plants, known as GENCOs, and privatize or professionalize distribution companies (DISCOs).
“The government has already introduced significant improvements in DISCOs and negotiated with Independent Power Producers (IPPs) to reduce costs.”
The government has successfully renegotiated contracts with 16 Independent Power Producers (IPPs) and terminated agreements with six others, resulting in a savings of Rs3,669 billion over the coming years.
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