Govt abolishes electricity duty on bills, offers relief to consumers

In a move to provide relief to power consumers, the federal government announced the abolition of the Electricity Duty (ED) on bills, effective July 2025. This step follows the recent removal of the Rs35 Pakistan Television (PTV) fee from electricity bills, which had drawn considerable public criticism.

Federal Energy Minister Awais Leghari has written to all provincial chief ministers regarding the decision to discontinue the collection of electricity duty through electricity bills, effective from July 1, 2025.

In his letters, the minister requested the support of provincial governments to address the complexities arising from multiple taxes, duties, and charges included in consumer electricity bills. He noted that while high electricity tariffs are already a challenge for consumers, the additional levies further complicate the billing system, making it harder for people to understand and manage their electricity costs.

The Electricity Duty, a provincial tax under Section 13 of the West Pakistan Finance Act 1964, had been imposed on electricity consumption across various sectors. It affected domestic, commercial, and industrial consumers, with rates varying between 1% and 3% depending on usage. For example, domestic and commercial consumers were charged 1.5%, while industrial users paid 1%, and larger industrial operations with over 500 KVA usage paid 3 paisas per unit of energy generated or consumed.

Power Division officials clarified that the duty was one of the key factors behind inflated electricity bills.

Leghari also mentioned the federal government’s ongoing efforts to reduce power tariffs, such as renegotiating contracts with Independent Power Producers (IPPs), lowering the Return on Equity (ROE) for government-owned power plants, and implementing other structural reforms.

“We are also focused on simplifying electricity bills so that they reflect the actual cost of power consumption, not a mix of various charges,” he added.

As part of this initiative, the Power Division plans to remove non-electricity-related charges from consumer bills. Starting July 2025, electricity duty will no longer be collected through bills. Leghari requested provincial governments to explore alternative methods for collecting provincial levies and duties.

He expressed confidence that this change will make electricity bills clearer and easier for consumers to understand, ensuring that they only pay for the cost of electricity. The minister also sought cooperation from the chief ministers in identifying and implementing alternative revenue collection methods to support the success of this initiative.