The government of Pakistan is set to reduce electricity tariffs by Rs8 per unit, with Prime Minister Shehbaz Sharif expected to make the formal announcement on March 23. This relief measure comes after receiving approval from the International Monetary Fund (IMF), Express News reported.
According to sources, the Ministry of Finance and the Power Division are actively exploring additional ways to further decrease electricity prices by another Rs2 per unit. A final decision regarding this additional reduction is expected before the official announcement.
The revised electricity tariffs will come into effect from April 1, 2025, and consumers will see the impact on their electricity bills starting in May. Out of the total Rs8 per unit reduction, Rs4.73 per unit is expected to be a permanent adjustment, ensuring long-term relief for consumers.
Measures Behind the Tariff Reduction
The government has taken several steps to facilitate the tariff cut. These include:
• Cancellation of Agreements with Six Independent Power Producers (IPPs): This move is expected to reduce capacity payments and lower overall electricity costs.
• Revising Contracts with 16 IPPs Under a “Take-and-Pay” Model: Instead of paying fixed capacity charges, payments will now be based on actual electricity consumption, reducing financial burden.
• Switching Bagasse Power Plants’ Currency from US Dollar to Pakistani Rupees: This change will protect power sector costs from exchange rate fluctuations.
• Lowering the Return on Equity (ROE) for Government Power Plants (GPPs) to 13%: Additionally, the dollar exchange rate for these plants has been fixed at Rs168, further stabilizing costs.
Government officials have also factored in the impact of declining global oil prices since March 16, 2025. Maintaining the current oil prices could save approximately Rs168 billion, allowing a Rs1.30 per unit reduction in power tariffs. However, this relief will only last for one month. If international oil prices continue to decline, the financial savings could reach Rs250 billion, potentially offering further reductions in the future.
IMF Approval and Future Plans
The International Monetary Fund (IMF) has given its approval for the tariff reduction, acknowledging the government’s decision to freeze oil prices for the next three months. This move is part of Pakistan’s broader economic strategy to stabilize energy costs and provide relief to consumers.
Additionally, the government is working to make Rs6 per unit of the Rs8 per unit cut a permanent reduction. This would provide long-term stability in electricity prices, reducing financial stress on households and businesses.
Removal of PTV Fee from Electricity Bills
In another consumer-friendly move, sources indicate that the Rs35 Pakistan Television (PTV) fee currently included in electricity bills may be removed starting in July 2025. The government is considering allocating direct budgetary funds for PTV operations instead of collecting fees through electricity bills. This decision, if implemented, would further lower the financial burden on electricity consumers.
Economic and Public Impact
The reduction in electricity tariffs is expected to provide significant relief to households and industries, reducing operational costs and improving affordability. Business sectors, particularly manufacturing and small enterprises, are likely to benefit from lower energy expenses, potentially boosting economic growth.
With these policy changes, the government aims to address long-standing issues in the power sector, including high production costs and inefficient agreements with private power producers. By focusing on structural reforms, Pakistan is moving toward a more sustainable and consumer-friendly energy market.
The official announcement by Prime Minister Shehbaz Sharif on March 23 will clarify the complete details of the tariff reduction and any additional relief measures under consideration.
