Govt plans to slash electricity prices by Rs6 per unit

ISLAMABAD: The federal government has devised a comprehensive plan to reduce electricity prices by Rs6 per unit, aiming to alleviate the burden on consumers who are struggling with high power tariffs.

The proposal, which has been shared with the International Monetary Fund (IMF), seeks to reduce the average electricity price from Rs44 to Rs38 per unit. However, the IMF has requested additional information before approving.

Funding for Electricity Price Reduction Initiative

1. Total funding required: Rs2,800 billion

2. Federal government’s contribution: Rs1,400 billion

3. Sources of federal government’s contribution:
– Reducing the development budget
– Withdrawing select subsidies announced in the budget
– Securing commercial loans
– Utilizing dividends from state-owned enterprises

4. Remaining funding (Rs1,400 billion) to be sourced from:
– National Finance Commission (NFC) allocations to provinces

However, Khyber Pakhtunkhwa has declined to contribute, while other provinces have yet to respond. The government intends to use these funds to decommission inefficient power plants and renegotiate or terminate contracts with Independent Power Producers (IPPs).

Current Electricity Prices

Currently, electricity prices in Pakistan are at an all-time high, with consumers facing rates up to Rs70 per unit.

While temporary relief has been provided to consumers using up to 200 units, this subsidy will expire in October. The government’s plan aims to provide sustained relief to consumers, with rates varying by usage.

The proposed rates are as follows: up to 200 units, Rs38 per unit; 301-700 units, Rs58 per unit (including taxes), above 700 units, Rs64 per unit, and commercial users, Rs76 per unit.

This plan aims to provide relief to consumers and promote economic growth.