Government aims to slash electricity tariffs by Rs6-8 per unit in two months

In a bid to provide much-needed relief to consumers grappling with soaring utility costs, the federal government is pushing to reduce electricity prices by Rs6-8 per unit within the next two months, Power Division officials announced on Monday, according to Geo TV. 

This move comes as high electricity tariffs continue to fuel public outrage, particularly among middle and lower-income households, while opposition parties criticize the government’s handling of the energy sector.

Federal Secretary Energy Dr. Muhammad Fakhr-e-Alam Irfan informed the Senate Standing Committee on Power that the government is also working to cut taxes on electricity bills. 

However, this requires approval from the International Monetary Fund (IMF), with talks expected in early March.

To tackle the mounting circular debt, currently estimated at Rs2.3 trillion, the government is in talks with banks to secure a Rs1.24 trillion loan at a fixed rate. 

Officials revealed that agreements with six independent power producers (IPPs) have already been terminated, saving Rs700 billion, including Rs300 billion in interest payments. 

Talks with 25 other IPPs on a “take-and-pay” model have also been finalized.

The State Bank of Pakistan’s recent rate cuts, from 22% to 12%, have created favorable conditions for borrowing. Authorities aim to capitalize on this by finalizing the loan term sheet before the IMF mission’s arrival next month.

Analysts say successful renegotiations with IPPs could significantly lower tariffs, boost industrial competitiveness, and restore public trust in the government’s economic management.