KARACHI: Prime Minister Shehbaz Sharif announced a significant reduction in electricity tariffs for both domestic and industrial consumers on Thursday, saying that his administration has slashed them by Rs7.41 per unit for domestic consumers and Rs7.59 for industrial ones.
Pakistan produces expensive electricity due to a combination of factors including high reliance on imported fossil fuels, inefficient energy mix, substantial transmission and distribution losses and chronic issues like circular debt and regulatory inefficiencies.
Pakistan has sought to ease fiscal pressure aggressively in recent months by undertaking energy reforms that reduce tariffs and slash capacity payments to independent power producers (IPPs).
“I am here to give you a good news regarding Pakistan’s economy and how the promise made by PML-N leader [Nawaz Sharif] in the manifesto has been fulfilled,” Sharif said at a ceremony in Islamabad, announcing that the price of electricity has been slashed by the government by Rs7.41 per unit, bringing it down to Rs34 rupees per unit.
In June 2024, the prime minister noted that the electricity price for industrial consumers stood at Rs58.50 per unit which was then lowered to Rs47.19.
“Today, I am announcing an additional reduction of seven rupees and 59 paisas for the industrial sector,” Sharif said to loud applause from the attendees.
The Pakistani premier reflected on the economic challenges his government inherited, saying that the nation was in danger of being declared bankrupt and that the International Monetary Fund (IMF) was unwilling to cooperate with it at first.
“When we took power, there were discussions of bankruptcy, the IMF was not willing to listen, there was no money to run power plants and we were facing a very difficult situation to meet energy needs,” Sharif said.
“Meanwhile, those who had brought Pakistan to the brink of default were celebrating, thinking that nothing could save Pakistan from default,” he said, referring indirectly to former prime minister Imran Khan, his political rival.
The Pakistani prime minister stressed that his government could not continue providing power subsidies until its External Fund Facility (EFF) loan program with the IMF ended.
“We will have to make decisions like privatization and right-sizing because subsidies cannot be provided while the IMF loan exists,” he said.
“Due to the IMF loan, the nation loses 800 billion rupees annually. I believe that all politicians and institutions must work together to save 800 billion rupees,” he added.
Despite the challenges, Sharif expressed confidence in Pakistan’s economic course, noting the recovery and reduced pressure on the country’s fiscal situation.
He noted that Pakistan’s petroleum product prices are now among the lowest in the region.
“In the past year, the price of petrol has decreased by Rs38 per liter and even today, petroleum product prices in Pakistan are the lowest in the region,” the premier said.
Sharif discussed the government’s plans to increase revenues by 35 percent, acknowledging that this figure was lower than the IMF’s original expectations but still a “significant improvement” over Pakistan’s past performance.
“We are going to increase revenues by 35 percent, which is less than what was agreed with the IMF but much more than in previous years,” he said.
The prime minister also provided an update on Pakistan’s circular debt, saying it stood at Rs2,393 billion. He said the government plans to eliminate it completely within the next five years.
“We are moving toward a path of progress,” Sharif emphasized. “The journey is challenging but we have the strength and resolve to move forward without looking back.”
