Government to Cut Electricity Tariffs by up to 12 Rupees by March 2025

Islamabad:The government is preparing to finalize negotiations with private Independent Power Producers (IPPs), state-owned power plants, and renewable energy projects by March 2025, with the aim of reducing electricity tariffs by up to 12 rupees per unit.

According to a senior government official, the government will complete the re-profiling of loans for the China-Pakistan Economic Corridor (CPEC) and state power plants, as well as finalize mechanisms for reducing taxes on electricity bills by February. The shortfall in revenue will be addressed through other sectors of the economy.

The official informed *The News* that, in the first phase, the government has already terminated contracts with five IPPs: *Hubco Power*, *Rousch Power*, *AES Lal Pir Power*, *Saba Power Plant*, and *Atlas Power*. Now, a deal with the *365 MW Pak Gen Power Limited* IPP is being terminated, meaning the government is on track to cancel a total of six contracts.

The official also stated that the government is targeting a reduction of electricity tariffs by up to 3 rupees per unit initially. Through the re-profiling of loans, the government aims to further reduce tariffs by 4 rupees per unit, and by lowering taxes on electricity bills, the impact will be reduced by an additional 5 rupees per unit. This would bring the off-peak tariff down from 41.68 rupees per unit to 29.68 rupees per unit, while the peak hour tariff would be reduced to 36 rupees per unit.

The Electricity Task Force is expected to complete its negotiations with 18 IPPs and convert these contracts to a “take-or-pay” model in the coming days. Of these, 15 IPPs have already signed revised contracts. The government will also engage in negotiations with nuclear power plants, hydroelectric plants, coal-based plants, RLNG-based plants, provincial government power plants, and GENCOs (Generation Companies).