Government plans Rs12 per unit cut in electricity tariffs by March

The government is considering a significant reduction in electricity tariffs by Rs12 per unit to ease the financial burden on consumers amid rising costs of essential commodities. The reduction is expected to be implemented by March 2025.

This initiative involves renegotiating contracts with private Independent Power Producers (IPPs), government power plants (GPPs), and renewable energy sources, including wind and solar power plants. The revised agreements could result in annual savings of up to Rs300 billion.

In the first phase, contracts with five IPPs, including Hubco Power, Rousch Power, AES Lalpir Power, Saba Power, and Atlas Power, were canceled. Additionally, the government terminated the agreement with Pakgen Power Limited, a 365 MW IPP.

The reduction will be achieved in three key steps. Negotiations with IPPs, GPPs, and renewable energy sources will contribute Rs3 per unit. Another Rs4 per unit reduction will be realized through debt re-profiling. Lastly, the government plans to slash Rs5 per unit by eliminating taxes on electricity bills.

Although this move will cause a revenue shortfall, sources indicate the deficit will be compensated through other economic sectors. If successful, this strategy could bring much-needed relief to tax-burdened citizens and stimulate economic growth.

This bold step highlights the government’s commitment to reducing electricity costs and promoting sustainable energy practices.