PM likely to announce power tariff relief package for industry, agriculture this week

ISLAMABAD: In a major policy initiative aimed at revitalising economic activity, the government is preparing to introduce a substantial electricity tariff relief package for the industrial and agricultural sectors.

Under the proposed scheme, electricity rates for incremental consumption will be reduced to Rs22-23.50 per unit for a fixed period of three years, starting November 1, 2025 and continuing until October 31, 2028.

At present, industrial consumers are charged Rs34 per unit, while agricultural users pay Rs38 per unit. Although industrial tariffs are typically adjusted through tax filings, the upfront cost remains a significant burden on operational expenses.

The Power Division, acting on the directives of Prime Minister Shehbaz Sharif, has developed the package with the objective of encouraging greater reliance on the national power grid. By incentivising higher electricity consumption, the government hopes to improve overall system efficiency, reduce per-unit generation costs, and mitigate the burden of ballooning capacity payments, currently projected at Rs1.766 trillion for the ongoing fiscal year.

According to senior government officials, the package has the potential to significantly reduce energy costs for businesses and farmers. Industrial units that double their electricity consumption could see a reduction of Rs7-8 per unit on their overall units, while agricultural users who increase usage by 100 per cent may benefit from a Rs4-6 per unit decrease.

The prime minister, in a high-level meeting held on October 20, directed the Power Division to design a comprehensive energy reform strategy that would promote productive electricity usage across the economy. The formal announcement of the package by the prime minister is expected this week.

Beyond economic stimulation, the initiative also serves as a structural objective: to enhance the utilisation of Pakistan’s installed generation capacity. By increasing grid-based electricity consumption, the government aims to spread fixed generation costs over a broader user base, thereby reducing the average cost per unit for all consumers. Officials further stated that the package will provide the industrial sector with pricing certainty for three years, enabling businesses to make long-term investment decisions with greater confidence. The measure is seen as crucial at a time when large-scale manufacturing (LSM) remains under pressure and exports are in decline.