Pakistan government has formally requested the National Electric Power Regulatory Authority (NEPRA) to approve a reduction of PKR 1.71 per unit in electricity rates. The proposed decrease in tariffs would be implemented through subsidies provided by the government.
NEPRA is scheduled to hold a hearing on the request on April 4. If approved, the reduction would apply to all power companies, including K-Electric, and would cover the period from April to June 2025.
The government plans to offer a subsidy of PKR 1.71 per unit to support this initiative, aiming to ease financial burdens for consumers during the specified duration
The subsidy, which covers the cost differences in electricity generation and distribution across various sources and regions, ensures a uniform consumer tariff nationwide.
According to recent hearings at NEPRA, K-Electric has received PKR 804 billion in tariff differential subsidies since 2006 to offset the impact of its higher-cost power generation.
In FY25, the government has budgeted PKR 681 billion for power tariff-related subsidies, with PKR 276 billion allocated for TDS to DISCOs, plus PKR 174 billion for KE.
Meanwhile, the International Monetary Fund (IMF) has allowed the Pakistani government to reduce electricity tariffs by PKR 1.0 per kWh for all consumers. This relief is expected to be funded through revenue collected from levies imposed on captive power plants (CPPs), said Mahir Binici, IMF Resident Representative in Pakistan.
Speaking to the media on Thursday, Binici shared details of the IMF’s agreement with Pakistan on the first review of the $7 billion Extended Fund Facility (EFF) program and a new $1.3 billion arrangement under the Resilience and Sustainability Facility (RSF).
Binici added that explicit subsidies under the EFF program, such as the tariff differential subsidy and revenue from CPP levies, should reduce power tariffs in the near term.
Earlier this month, the government introduced a grid levy of PKR 791 per million British thermal units (mmBtu) on LNG supplied to CPPs.
However, the Islamabad High Court has stayed the levy until a hearing on April 30, following petitions from approximately 20 industrial units, primarily from the textile sector.
The IMF’s statement noted the importance of timely adjustments to electricity and gas tariffs by Pakistani authorities, emphasizing the need for accelerated reforms.
These include improving distribution efficiencies, integrating captive power into the national grid, enhancing the transmission system, privatizing inefficient power generation companies, and expanding renewable energy adoption.
The measures aim to stabilize the energy sector, tackle circular debt, and alleviate cost pressures while maintaining affordability for consumers.
