Pakistan Govt Slashes Electricity Prices by Rs2 Per Unit

ISLAMABAD – In a major decision aimed at reducing financial pressure on electricity consumers, the federal government has announced a Rs2 per unit reduction in power tariffs for the second quarter of fiscal year 2024-25.

The move, pending approval from the National Electric Power Regulatory Authority (NEPRA), is expected to provide over Rs52 billion in relief to consumers, with the revised rates taking effect from March 2025.

Key Highlights:

• Power Tariff Cut: Rs2 per unit reduction for Q2 FY 2024-25.

• Relief Amount: Expected to exceed Rs52 billion.

• Effective From: March 2025.

• NEPRA Public Hearing: Scheduled for February 12, 2025.

• Beneficiaries: All state-owned distribution company (Disco) consumers and K-Electric users, excluding lifeline consumers.

NEPRA’s Role & Approval Process

Power distribution companies have submitted their requests to NEPRA for approval. A public hearing is set for February 12, where stakeholders will discuss the impact of the price cut. If approved, the lower rates will be reflected in electricity bills for March, April, and May 2025.

Fuel Cost Adjustment – A Modest Reduction

Despite this upcoming relief, the state-owned Central Power Purchase Agency (CPPA) has stated that February’s fuel cost adjustment will see only a 28-paise per unit reduction for Disco consumers. This is due to adjustments based on previous months’ fuel charges:

• Consumers paid a negative fuel charge adjustment (FCA) of 76 paise per unit in January for November’s consumption.

• A proposed Rs1.04 per unit reduction for February, based on December’s fuel costs, was lowered to just 28 paise per unit.

Govt Struggles to Secure IMF Tax Relief

In a setback for further consumer relief, the International Monetary Fund (IMF) has rejected Pakistan’s request to reduce sales tax on electricity bills. The Ministry of Energy had sought tax cuts to ease the burden on households and businesses, but the IMF dismissed the request, citing fiscal constraints.

Future Implications

With rising energy costs, the Rs2 per unit reduction is a welcome move for millions of consumers. However, continued pressure from international lenders like the IMF limits the government’s ability to implement further tax relief.

What’s Next?

• Public hearing on February 12 will determine final approval.

• Electricity bills from March onward will reflect the revised prices.

• Government negotiations with the IMF could influence future relief measures.

Final Thoughts

This reduction in electricity prices offers short-term relief to consumers, but long-term solutions are still needed to address Pakistan’s energy crisis. Keeping an eye on NEPRA’s decision and future fuel adjustments will be crucial for households and businesses alike.

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Original Source: Tribune Pakistan