The federal government is set to announce a long-awaited decrease in electricity prices today [Thursday], with the new rate expected to be reduced by Rs8 per unit. A key meeting chaired by Prime Minister Shehbaz Sharif, featuring federal ministers and senior officials, will focus on reforms in the energy sector that have facilitated this price reduction.
This price reduction is part of Prime Minister Sharif’s broader economic strategy aimed at alleviating financial pressure on consumers while ensuring adherence to IMF guidelines, signaling a significant move to ease public discontent amid the country’s economic challenges.
The anticipated cut is also the result of multiple strategic measures, including the termination of agreements with six Independent Power Producers (IPPs) and the renegotiation of contracts with 16 other IPPs under a take-and-pay model.
Additionally, converting bagasse power plants’ currency from US dollars to Pakistani rupees and reducing the return on equity (ROE) for government power plants to 13% have been critical in recalibrating electricity tariffs.
The tariff adjustment also considers the recent decline in global oil prices, which has saved the government approximately Rs168 billion. This saving is expected to help achieve an additional Rs1.30 cut in power tariffs.
The IMF is expected to endorse the reduction, acknowledging the government’s efforts to stabilise the economy, including freezing fuel prices for three months.
Furthermore, the government plans to make Rs6 of the Rs8 reduction permanent in electricity pricing. Reports also suggest the potential removal of the Rs35 Pakistan Television (PTV) fee on electricity bills, with implementation expected by July 2025.