PM announces cut in power tariffs

ISLAMABAD: In a significant relief to inflation-weary masses, Prime Minister Shehbaz Sharif declared on Thursday a decrease in electricity prices for residential consumers by Rs7.41 per unit, while the rates for industrial consumers have been lowered by Rs7.69 per unit.

He also pledged to further reduce electricity prices as the economy is gradually improving. However, he added that his team had to make hectic efforts to convince the International Monetary Fund (IMF) to lower the rates of electricity to provide relief to the masses.

The prime minister made the announcement at a special function attended by cabinet ministers and top businessmen, one month after the government requested the National Electric Power Regulatory Authority (Nepra) for a decrease in electricity prices, following the IMF’s approval of a Rs1 per kilowatt reduction in utility rates.

PM likely to announce power rate cut today

Speaking at the event, he said that the country cannot progress without a significant reduction in electricity prices, adding “It’s no ordinary feat as we’d to work hard to make this happen.”

Sharif also touched upon the revised agreements with independent power producers (IPPs) and emphasised additional significant reforms that, according to him, had led to savings of Rs3,696 billion for the national treasury.

He stated that this amount was meant to be paid to the IPPs, adding that efforts are being made to tackle the circular debt, with a goal to eradicate it within five years, contingent on changes in behaviour.

“I have no complaints against the IPPs but have engaged in discussions to ensure public benefit. IPPs have made massive profits, and now it’s time for them to give back to the nation,” he remarked.

Sharif also stated that a long-term solution had been developed for a circular debt of Rs2,393 billion, emphasising that this debt would no longer circulate and would be completely eliminated once and for all.

Giving details of the price reduction, he explained that the rate per unit, which was Rs58.35 in June 2024, has been lowered to Rs48.19, resulting in a decrease of Rs10.3 per unit.

He expressed optimism that the decrease in electricity prices announced today would have a positive impact on the general public, leading to an improvement in the quality of life for numerous individuals and communities.

He also pointed out the persistent problem of electricity theft, with an estimated annual loss of around Rs600 billion for the country.

He maintained that these losses disproportionately affect vulnerable populations like the poor, widows, and orphans, and urged for strict actions against those involved in it to stop electricity theft.

In order to lessen the financial burden on consumers, particularly in light of rising electricity costs, Sharif emphasised the importance of these reforms in improving economic conditions and providing relief to the general public.

He went on say that the government made all-out efforts to avert a default situation for the country, emphasising that the time has come to implement the commitments outlined in the party’s manifesto.

He recalled that the sword of Damocles was hanging over the head when his party assumed power, as the IMF was unwilling to engage in discussions.

“Initially, the IMF had declined to allow a decrease in electricity prices; however, we argued that rather than reducing petrol prices, relief should be offered through electricity,” he added.

He also mentioned that the economy started improving gradually, emphasising that this progress could not have been possible without the support of Army Chief General Syed AsimMunir Shah and his associates.

He said that the policy rate, which was previously at 22.5 percent, had been reduced to 12 percent, providing significant relief to the business community, while inflation had fallen from 38 percent to single digits.

He noted that within a year, the government had also lowered petroleum prices by Rs38, making them the lowest in the region.

He announced plans to soon hold meetings with industrialists to further improve the economic situation, adding to strengthen the economy, structural reforms will be necessary.

He emphasised that the country’s economy is transitioning from a state of despair to one of hope; however, he highlighted that subsidies cannot be given under the IMF programme. He directly linked economic growth with electricity prices, stating that without a decrease in energy costs, progress in industry, trade, and agriculture would be unattainable.

Sharif emphasised the need for rightsizing and privatising state-owned enterprises (SOEs) as crucial but challenging decisions that must be taken, highlighting that the government faced a substantial loss of Rs800 billion due to these unprofitable entities.

The prime minister also claimed that this year, the government is set to collect 35 percent more in taxes compared to the previous year.

Copyright Business Recorder, 2025