Govt to announce major electricity price cut, Rs. 9-10 deduction expected
The federal government is set to announce a significant reduction in electricity tariffs, as Power Distribution Companies (Discos) request a negative adjustment of Rs. 52.123 billion, roughly Rs. 2 per unit, for the second quarter of FY 2024-25 under the Quarterly Tariff Adjustment (QTA) mechanism.
This reduction, which is expected to take effect from March 2025, will benefit millions of consumers across Pakistan by lowering their electricity costs. The National Electric Power Regulatory Authority (NEPRA) will hold a public hearing on February 12, 2025, to review the petitions submitted through the Central Power Purchasing Agency Guaranteed (CPPA-G).
The negative adjustment is primarily due to the lower-than-anticipated exchange rate (Rs. 278/$ instead of Rs. 300/$) and a reduction in interest rates. The QTA relief will apply to electricity tariffs for March, April, and May 2025, replacing the existing Paisa 19.5 per unit QTA, which expires on February 28, 2025.
Additionally, Prime Minister Shehbaz Sharif has directed the Power Division to reduce electricity tariffs by a further Rs. 7 per unit, particularly benefiting industrial consumers starting from April 2025. This brings the total tariff reduction to Rs. 9-10 per unit.
These savings are expected due to the termination of Power Purchase Agreements (PPAs) for five Independent Power Producers (IPPs) and the renegotiation of contracts for eight bagasse-fired and 15 other IPPs, generating annual savings of Rs. 137 billion. These measures will help lower energy costs by Rs. 1.14 trillion.
The third quarterly adjustment for FY25 will also be applicable to K-Electric consumers, but lifeline consumers benefiting from subsidies will not be eligible for the QTA relief.
