In a shift from previous promises to lower electricity costs the Power Division plans to cut subsidies for domestic consumers by 25%, as approved by the Special Investment Facilitation Council (SIFC), as reported by The News.
This move is aimed at fostering economic growth and securing the International Monetary Fund’s (IMF) approval.
The new tariff scheme will see a reduction in subsidies for households using less than 400 units of electricity from Rs592 billion to Rs431 billion. It also eliminates Rs39.30 billion in agricultural subsidies, aligning tariffs more closely with service costs.
Additionally, the plan withdraws Rs222 billion in cross-subsidies for low-usage consumers, introducing fixed charges ranging from Rs50 to Rs450 monthly for those consuming up to 200 units. Consumers using over 100 units will face higher fixed charges, but their monthly bill increase is capped at Rs1,000.
The government aims to encourage energy efficiency by imposing higher charges on high-consumption users and offering lower tariffs for those on three-phase ToU meters. Industrial and commercial consumers will see adjustments in their fixed and variable tariffs, aimed at reducing the cross-subsidy burden and enhancing competitiveness.
This overhaul of the electricity tariff system is intended to stimulate economic activity and align with fiscal responsibility goals, despite concerns over the move away from earlier commitments to reduce electricity costs.”
