Govt plans to cut electricity prices by up to Rs10 per unit

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The federal government has unveiled a revised plan to reduce the baseline power tariff by Rs 8 to Rs 10 per unit, Express News reported on Friday, quoting sources.

The plan aims to address the issue of circular debt, which will be reduced through the reduction of the debt amount.

Under this plan, a reduction of Rs130 billion in debt repayments will create financial space, and the savings will be used to lower electricity prices. The move is also expected to help reduce ongoing financial losses in the electricity sector.

Sources indicate that the IMF’s review mission is set to visit Pakistan at the beginning of next month. During this visit, the government plans to present the proposal to the IMF mission.

However, it is worth noting that the IMF had previously rejected a proposal to reduce taxes to lower electricity prices. Under the new plan, the basic tariff will be reduced by Rs8 to 10 per unit.

Meanwhile, consumers of all power distribution companies (Discos) were set to receive a relief of up to Rs2 per unit in electricity rates for January 2025, thanks to a fuel adjustment. However, K-Electric (KE) consumers were excluded from this reduction, it emerged yesterday.

The reduction came as a result of fluctuations in energy prices for power generation plants. The Central Power Purchasing Agency Guarantee Limited (CPPA-G) requested a Rs2 per unit decrease in electricity charges for January 2025 under the Fuel Charges Adjustment (FCA).

NEPRA scheduled a public hearing on February 27, 2025, to review the proposal for Ex-WAPDA Distribution Companies (XWDISCOs).

CPPA-G explained that the actual fuel cost in January 2025 was lower than the reference fuel charges, which justified the price cut.

The generation mix for the month included hydropower, nuclear energy, and Re-Gasified Liquefied Natural Gas (RLNG), with smaller shares from coal, furnace oil, and renewables.

The total energy delivered to Discos was 7,816 GWh, with an average fuel cost of Rs11.008 per unit, which was Rs2 lower than the reference cost.

If approved, the reduction was expected to provide relief amid ongoing concerns over high electricity tariffs.

NEPRA’s final decision would follow the public hearing, allowing stakeholders and consumers to present objections or feedback.