ISLAMABAD: Prime Minister Shehbaz Sharif has established a seven-member committee, headed by Deputy Prime Minister Senator Ishaq Dar, to develop a strategy for reducing power tariffs by lowering taxes in alignment with discussions held with the International Monetary Fund (IMF).
The committee comprises Economic Affairs Minister Ahad Khan Cheema, Finance Minister Senator Muhammad Aurangzeb, Power Minister Awais Leghari, Secretary Power Dr. Muhammad Fakhr e Alam Irfan, Secretary Petroleum Momin Agha, and Chairman FBR Rashid Langrial.
Key considerations include reducing taxes from January to June 2025, which could result in an estimated revenue impact of Rs 290 billion. However, the Finance Division has expressed concerns over potential adverse effects on tax revenue targets, fiscal balance, and provincial surpluses under the Extended Fund Facility (EFF).
The committee’s Terms of Reference (ToRs) include:
Finalizing proposals for tariff reduction by lowering taxes.
Engaging stakeholders, including provincial governments, the Petroleum Division, and FBR, to achieve consensus.
Sharing the proposal with the IMF and seeking approval before implementing consumer relief measures.
The committee has been tasked with submitting its recommendations within one week.
Currently, taxes add Rs 9 per unit to electricity bills, significantly burdening consumers. The government is considering measures such as tax reductions, renegotiation of Independent Power Producer (IPP) agreements, and re-profiling Chinese power project debts to achieve meaningful bill reductions.
Taxes contributing to consumer bills total Rs 964 billion annually, including GST (Rs 708 billion), income tax (Rs 98 billion), and other levies. The government anticipates that implementing these measures will provide substantial relief to electricity consumers nationwide.
Story by Mushtaq Ghumman
