Massive relief on electricity prices on the cards ahead of summers

ISLAMABAD – Prime Minister Shehbaz Sharif is all set to reduce electricity prices by Rs8 per unit following approval from the International Monetary Fund (IMF).

He is expected to announce the relief on March 23 while it will be effective from April 1, 2025, and the public will receive bills with revised rates in May.

Reports said out of the Rs8 per unit reduction, Rs4.73 per unit will be a permanent decrease. The government is able to cut the power tariff due to the termination of contracts with six Independent Power Producers (IPPs), converting power purchase agreements with 16 IPPs to a “take and pay” model, linking bagasse power plants to the Pakistani rupee instead of the US dollar, limiting the return on equity of state-owned power plants to 13% based on the Pakistani rupee, and fixing the exchange rate of the US dollar at Rs168.

Relevant officials told local media that the money saved by the government by not decreasing the petroleum prices from March 16 will be utilized to reduce the electricity prices by Rs1.30 per unit.

The IMF has reportedly allowed the Pakistani government to provide relief of Rs250 billion, which will be saved by not reducing petrol prices for three months, to masses, provided that petroleum prices continue to decline in the international market.

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