Centre ends provincial electricity duty on power bills from July 1

ISLAMABAD: In a move aimed at easing the burden on electricity consumers, the federal government has abolished the provincial electricity duty on power bills effective July 1, and has officially notified all chief ministers of the decision.

Federal Minister for Power Awais Leghari has written a letter to the chief ministers of all provinces, notifying them of the federal government's decision to scrap electricity duty and explore "alternative mechanisms" for collecting provincial levies and duties.

In the letter — a copy of which is available with Geo News, the minister sought the support of all provincial chief executives in removing complexity arising from multiple charges, taxes, and duties being collected through consumer bills.

He said that high electricity tariffs are already a significant challenge, and the additional burden of various levies further complicates the billing structure, making it difficult for consumers to understand and manage their electricity costs.

Leghari, in his letter, highlighted the federal government's efforts regarding various measures to reduce power tariffs, including renegotiating Independent Power Producer (IPP) contracts, lowering the Return on Equity (ROE) for government-owned power plants, and implementing other structural reforms.

"In parallel, we are also committed to simplifying electricity bills so that they primarily reflect the actual cost of power consumption rather than serving as a collection mechanism for various additional charges," he added.

The minister urged provincial governments to explore alternative mechanisms for collecting provincial levies and duties, rather than relying on electricity bills as a collection channel.

He expressed confidence that the move will not only make electricity bills more transparent and easier to comprehend but also ensure that "consumers are paying only for the cost of electricity, rather than a mix of other charges".

The energy minister also sought the cooperation of all chief ministers in identifying and implementing alternative revenue collection methods will be instrumental in making this initiative a success.