The government is preparing to announce a significant reduction in electricity tariffs, with Prime Minister Shehbaz Sharif expected to officially unveil the decision on March 23.
Following approval from the International Monetary Fund (IMF), the electricity price is set to be cut by Rs.8 per unit, effective from April 1, 2025, with the reduced rates reflected in consumer bills starting May.
Sources have revealed that the Ministry of Finance and the Power Division are also exploring additional measures to further reduce rates by Rs.2 per unit. A final decision on this will be made before the official announcement.
The tariff reduction, which includes both temporary and permanent adjustments, will result in Rs.4.73 per unit being permanently adjusted. The changes come as part of a series of measures, including the cancellation of agreements with six Independent Power Producers (IPPs), renegotiating contracts with 16 IPPs under a "take-and-pay" model, and shifting currency from US dollars to Pakistani rupees for bagasse power plants. Additionally, the return on equity for government power plants (GPPs) will be lowered to 13%, with the dollar rate fixed at Rs.168.
The tariff reduction also accounts for the impact of lower global oil prices since March 16, 2025. The freeze on oil prices by the government is expected to save Rs.168 billion, which will contribute to a reduction of Rs.1.30 per unit in electricity rates. While this reduction will last for only one month, further savings could arise if oil prices continue to decline, potentially reaching Rs.250 billion in savings.
The IMF has endorsed the government’s decision to freeze oil prices for three months. Additionally, the government is exploring removing the Rs35 PTV fee currently included in electricity bills, with plans to implement this change by July 2025. To support PTV’s operations in the future, funds will be allocated in the fiscal year 2026 budget, without relying on electricity bill collections.
