PM Orders Power Division to Slash Electricity Tariff by Rs. 7 Per Unit

Prime Minister Shehbaz Sharif has ordered the Power Division to reduce electricity tariffs by Rs. 7 per unit for all consumer categories across Pakistan, including Karachi. The directive comes after consultations with the International Monetary Fund (IMF), reported Business Recorder. This was decided when the premier last week expanded the “Tariff Reduction Committee” now led by Deputy Prime Minister and Foreign Minister Ishaq Dar. The government has also decided to close legal proceedings against independent power producers for abnormal profits. The committee will likely finalize the tariff reduction plan by February 10, 2025, and commence implementation on April 1, 2025. The proposed Rs. 7 per unit relief will be achieved through revised IPP agreements (Rs. 2 per unit), removal of federal and provincial taxes (Rs. 3 per unit), and reduced Return on Equity for government-owned power projects. Currently, taxes and surcharges make up 40 percent or Rs. 964 billion in electricity bills with Rs. 391 billion contributed by the federal government and Rs. 563 billion by provinces. The Finance Division is against eliminating these taxes fearing it could impact fiscal targets and revenue collection under the IMF’s $7 billion bailout.