Govt Cuts Electricity Tariffs by Rs7.41 Per Unit for Relief!

In a long-awaited move, the federal government has cut electricity tariffs by Rs7.41 per unit for residential consumers and Rs7.59 per unit for commercial users. Announced by Prime Minister Shehbaz Sharif, this decision is aimed at reducing inflationary pressure, stimulating industries, and ensuring economic stability under IMF agreements.

Following the reduction, household consumers will now pay Rs34.37 per unit—a step the government hopes will boost exports, agriculture, and trade. PM Shehbaz emphasized the importance of lower power costs in driving economic growth.

Key Reasons Behind the Tariff Cut:

🔹 IPP Agreement Revisions – Six contracts terminated, 16 renegotiated, lowering payments.
🔹 Bagasse Power Currency Shift – Converted from US dollars to PKR, reducing exchange rate impact.
🔹 Return on Equity (ROE) Adjustments – Fixed at 13% with an exchange rate of Rs168 for state-run power plants.
🔹 Global Oil Price Drop – Saved Rs168 billion, allowing an extra Rs1.30 per unit reduction.
🔹 Circular Debt Plan – Addressing Rs2.39 trillion in unpaid dues for sector stability.

The government plans to make Rs6 of the Rs7.41 reduction permanent, ensuring long-term relief. Additionally, reports indicate that the Rs35 PTV fee on electricity bills may be removed by July 2025.

The IMF has acknowledged Pakistan’s efforts, including a freeze on fuel prices for three months and a recent Rs1 per unit tariff cut funded by levies on captive power plants.

Meanwhile, power generation has dropped to its lowest in five years, reflecting slowed economic activity. However, with inflation easing from 38% to lower levels and the interest rate cut from 22.5% to 12%, the government hopes these reforms will revive growth and strengthen industries.