ISLAMABAD – The International Monetary Fund (IMF) has turned down Pakistan’s proposal to reduce industrial electricity prices by Rs2.70 per unit, citing concerns over cross-subsidies and the need for comprehensive power sector reforms.
The Ministry of Energy had suggested eliminating cross-subsidies provided by the industrial sector to low-end residential consumers, offering Rs37 billion in relief for February to June and Rs89 billion annually. However, the IMF emphasized that isolated measures would not address systemic issues in the power sector and urged Pakistan to implement targeted subsidy reforms expected to roll out in July.
Zafar Yab Khan, spokesperson for the Ministry of Energy, confirmed the government’s decision to focus on broader tariff reductions for all segments rather than industry-specific relief.
This marks the second time in seven months that the government has sought to reduce industrial tariffs, following last year’s Rs10.69 per unit cut announced by Prime Minister Shehbaz Sharif to boost exports and production.
Meanwhile, residential consumers continue to bear the burden of high electricity costs, with per-unit prices, including taxes, ranging from Rs65 to Rs70. Proposed tax eliminations, such as income tax, sales tax, and electricity duty, could reduce tariffs by Rs4.77 per unit but would cost federal and provincial governments Rs580 billion annually.
Despite previous proposals to abolish taxes like the Rs35 PTV fee and Rs62 billion in electricity duty, the financial implications on provincial revenues remain significant, with Punjab facing a potential Rs182 billion hit.
As high electricity costs push consumers towards rooftop solar panels, the government faces growing pressure to balance relief measures with sustainable revenue generation.
Story by Shahbaz Rana
