Prime Minister Shahbaz Sharif to Reduce Electricity Rates by Rs. 8 Per Unit After IMF Approval

Islamabad:Prime Minister Shahbaz Sharif is fully prepared to reduce electricity tariffs by Rs. 8 per unit following approval from the International Monetary Fund (IMF). The tariff reduction will take effect from April 1, 2025, and the public will receive reduced bills in May.

Senior officials involved in the tariff reduction exercise told *The News* that out of the Rs. 8 per unit reduction, Rs. 4.73 per unit will be a permanent decrease. This reduction is made possible by the completion of agreements with six Independent Power Producers (IPPs), transitioning the power purchase agreements of 16 IPPs to a “Take and Pay” model, linking bagasse power plants to the Pakistani rupee instead of the US dollar, and limiting the return on equity for state-owned power plants to 13 percent based on the Pakistani rupee. Additionally, the value of the US dollar has been fixed at Rs. 168.

Senior officials also mentioned that they are factoring in the impact of not reducing petroleum product prices, which were expected to decrease in the international market starting March 16, 2025.

They stated that the cost of not reducing petroleum prices is estimated at Rs. 168 billion, which will be used to facilitate a reduction of Rs. 1.30 per unit in electricity tariffs. The IMF has approved relief for the government’s top officials, subject to the condition that if petroleum prices continue to decrease in the international market, the relief will be granted despite the delay in reducing domestic petroleum prices.