Islamabad, Jan 27: Prime Minister Shehbaz Sharif has directed the Power Division to reduce electricity tariffs by Rs. 7 per unit for all consumer categories across Pakistan, including Karachi. This decision follows consultations with the International Monetary Fund (IMF), as reported by Business Recorder. The move is a result of the expanded “Tariff Reduction Committee,” now chaired by Deputy Prime Minister and Foreign Minister Ishaq Dar.
The government’s latest initiative also includes halting legal actions against independent power producers for generating excessive profits. The tariff reduction plan is expected to be finalized by February 10, 2025, with implementation scheduled to begin on April 1, 2025. 
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To achieve the Rs. 7 per unit reduction, the plan involves several measures. This includes revising agreements with Independent Power Producers (IPPs) to secure Rs. 2 per unit, removing federal and provincial taxes to provide Rs. 3 per unit relief and lowering the Return on Equity for government-owned power projects.
Currently, taxes and surcharges account for around 40% or Rs. 964 billion of electricity bills, with Rs. 391 billion from the federal government and Rs. 563 billion from the provinces. However, there is opposition from the Finance Division regarding the removal of these taxes, fearing it could disrupt fiscal goals and impact revenue collection under the IMF’s $7 billion bailout program.
This proposed reduction is part of the government’s ongoing efforts to ease the financial burden on consumers while addressing the complex challenges of balancing energy costs and maintaining fiscal discipline.
