The government has confirmed that it will not impose new taxes or levies to compensate for the Rs1.56 trillion revenue shortfall arising from revisions to tariff agreements with state-owned generation companies (Gencos).
The announcement comes after the government implemented changes to reduce electricity tariffs, which will result in significant consumer savings of Rs1.5 trillion, The Express Tribune reported.
At a public hearing on Thursday, officials from the Power Division clarified that the tariff revisions, which include adjustments to the agreements with Gencos, would not be offset by additional taxation. Instead, the government plans to manage the revenue loss by reducing subsidies to consumers.Â
This shift is part of broader efforts to reduce the financial burden on the public while addressing the sustainability of the power sector.
Measures such as transitioning power plants from the “take-or-pay” model to the “hybrid take-and-pay” system have been implemented to lower capacity payments and reduce the financial strain on both producers and consumers.
Despite concerns raised by interveners about the high costs of gas supply and the financial challenges faced by power plants, the government remains committed to its strategy of reducing the impact of high tariffs.Â
However, there is ongoing debate about whether these changes will be enough to address the long-term issues of inefficiency and financial instability within the power sector.
