ISLAMABAD: Prime Minister Shehbaz Sharif has directed the Power Division to reduce electricity tariffs by Rs 7 per unit across all consumer categories, including the industrial sector, following consultations with the International Monetary Fund (IMF). An IMF delegation is expected to visit Islamabad next month to finalize discussions.
The directive emerged as the Prime Minister expanded the “Tariff Reduction Committee,” now led by Deputy Prime Minister/Foreign Minister Senator Ishaq Dar. The revamped committee includes key figures such as Lt General Muhammad Zafar Iqbal, National Coordinator of the Task Force on Energy, who played a significant role in renegotiating agreements with Independent Power Producers (IPPs), achieving savings of Rs 1.4 trillion over the life of the projects.
The government’s strategy also includes withdrawing proceedings initiated by NEPRA against IPPs for excess profits and integrating KAPCO into the national grid. These measures, along with revised capacity payment agreements, are projected to save Rs 813 billion, helping settle an estimated Rs 329 billion in circular debt.
The committee is assessing a comprehensive tariff reduction plan, aiming to stimulate economic growth by easing the financial burden on industries and households. Proposed measures include a Rs 2/unit reduction through revised IPP agreements, Rs 3/unit relief from tax elimination, and additional reductions via adjustments to government-owned projects’ Return on Equity (RoE).
However, the Finance Division has raised concerns about the fiscal impact of removing electricity taxes, which constitute 40% of electricity bills and generate Rs 964 billion annually. Despite this, the Prime Minister emphasized the importance of the tariff cut, targeting April 2025 for implementation.
During a cabinet meeting, PM Shehbaz commended progress on power sector reforms and expressed confidence that the Rs 7/unit reduction would bolster the economy and provide significant relief to consumers.
Story by Mushtaq Ghumman
