PM all set to cut power tariff by Rs8 per unit on 23rd

ISLAMABAD: Prime Minister Shehbaz Sharif is all set to scale down the power tariff by Rs8 per unit on March 23 after getting the IMF nod. The reduction in tariff will be effective from April 1, 2025 and people will be receiving reduced bills in May.

“However, out of Rs8 per unit, Rs4.73 per unit reduction in tariff will continue on a permanent basis as a result of scrapping agreements with six IPPs, revising power purchase agreements (PPAs) of 16 IPPs on take and pay mode, delinking bagasse power plants from US dollar and lining them with Pak rupee and scaling down the RoE (Return and Equity) of government power plants (GPPs) to 13 per cent based on Pak rupee and fixing the value of US dollar at Rs168,” senior officials told The News. “We are going to include in the power tariff reduction the impact of not decreasing the petroleum products prices that went down in the international market, which was due from March 16, 2025. The impact of not decreasing the POL prices has been estimated at Rs168 billion which will be utilized in reducing the power tariff by Rs1.30 per unit. The IMF has given its nod to the government’s top functionaries for providing a relief after not decreasing the POL prices for three months, by up to the impact of Rs250 billion in case POL prices continue to dwindle in the international market. However, Rs1.30 per unit relief in power tariff, because of not decreasing the POL prices from March 16, 2025, would be for one month, meaning that Rs1.30 per unit relief would be short-lived.

In addition, the top functionaries of Finance and Power Divisions are also working on how to further reduce the power tariff by Rs2 per unit and considering different options which will be finalized prior to its announcement by the premier on March 23. “The government wants to include Rs6 in Rs8 per unit relief as part of permanent reduction.”

To a question, the officials said the government was not going to erase Electricity Duty (ED) on electricity bills being collected for provincial governments as the Punjab government has opposed it. So the Electricity Duty would remain part of electricity bills. The officials said the IMF had disallowed the proposed reduction of GST in electricity bills from 18 per cent to 12 per cent, fearing it would increase the deficit in tax revenue which increased to Rs606 billion in eight months of the current fiscal.

However, the government has decided to erase Rs35 as PTV fee, but it will no longer be a part of the bills from July 2025 as in the budget for FY2026, the government would allocate the budget for the PTV to make it operational.