Power tariff likely to go down by Rs8/unit next month

Prime Minister Shehbaz Sharif was expected to announce a reduction of Rs8 per unit in the electricity tariff on March 23 in the following the approval of the government's proposals by the International Monetary Fund (IMF), sources said on Wednesday.

According to the sources, officials of the Ministry of Finance and the Power Division were considering various options to reduce electricity prices by Rs2 per unit, while the government aimed at implementing a reduction of Rs6 out as a permanent adjustment.

"The proposal will be finalised before March 23," a sources said, adding that the reduced tariff would implement from April 1. "Hence, electricity consumers will lower bills from May," the source added. "Out of the total reduction of Rs8 per unit, Rs 4.73 per unit will be a permanent adjustment."

The change in tariff came after cancellation of contracts with six Independent Power Producers (IPPs), and the reviewing power purchase agreements with 16 IPPs and converting them to a 'take-and-pay' model, according to the sources.

Converting bagasse-based power plants from the US dollars to Pakistani rupee – in which the US dollar has been fixed at Rs168 – and the 13% reduction on return on equity (ROE) for the government power plants (GPPs) also contributed to the tariff reduction.

Officials have said that now the tariff reduction will be calculated taking into account the impact of the prices of oil products, which came down in the international market from March 16, 2025. The estimated fiscal impact of maintaining current oil prices is about Rs168 billion.