Prime Minister Shehbaz Sharif is poised to implement a reduction in power tariffs by Rs8 per unit, effective March 23, following approval from the International Monetary Fund (IMF). This decrease will take effect on April 1, 2025, with consumers expected to see lower bills starting in May.
According to senior officials, of the total Rs8 reduction, Rs4.73 per unit will be a permanent adjustment. This change results from the cancellation of agreements with six Independent Power Producers (IPPs), the revision of power purchase agreements (PPAs) for 16 IPPs to a take-and-pay model, the delinking of bagasse power plants from the US dollar to the Pakistani rupee, and a reduction in the Return on Equity (RoE) for government power plants (GPPs) to 13 percent, based on the Pakistani rupee, with the US dollar fixed at Rs168.
Officials also noted that the tariff reduction will account for the impact of not lowering petroleum product prices, which had decreased in the international market since March 16, 2025. The estimated financial impact of maintaining the current petroleum prices is around Rs168 billion, which will contribute to a Rs1.30 per unit reduction in power tariffs. The IMF has approved this relief for the government, acknowledging the decision to keep petroleum prices unchanged for three months, with potential impacts reaching up to Rs250 billion if international prices continue to fall. However, the Rs1.30 per unit relief will only last for one month.
Additionally, officials from the Finance and Power Divisions are exploring ways to further reduce the power tariff by an additional Rs2 per unit. They are considering various options, which will be finalized before the Prime Minister’s announcement on March 23. The government aims to make Rs6 of the Rs8 per unit reduction a permanent adjustment.
When asked about the Electricity Duty (ED) on bills collected for provincial governments, officials confirmed that the government would not eliminate this charge, as the Punjab government has opposed such a move. Therefore, the Electricity Duty will remain on electricity bills.
Furthermore, the IMF has rejected a proposed reduction of the Goods and Services Tax (GST) on electricity bills from 18 percent to 12 percent, citing concerns that it could exacerbate the tax revenue deficit, which has already risen to Rs606 billion in the first eight months of the current fiscal year.
However, the government has decided to remove the Rs35 PTV fee from electricity bills, effective July 2025. In the upcoming budget for FY2026, the government plans to allocate funds to make the Pakistan Television Corporation (PTV) operational.
