Govt Likely to Cut Electricity Price By Up to Rs. 10 Per Unit

The federal government will likely announce a big cut in electricity tariffs as Power Distribution Companies (Discos) seek a negative adjustment of Rs. 52.123 billion—around Rs. 2 per unit—for the second quarter of FY 2024-25 under the Quarterly Tariff Adjustment (QTA) mechanism. This move will take effect from March 2025 and will lower electricity costs for millions of consumers across Pakistan, reported a news daily. 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 largely attributed to a lower-than-expected 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. Prime Minister Shehbaz Sharif has directed the Power Division to cut electricity tariffs by a further Rs. 7 per unit, particularly benefiting industrial consumers from April 2025. This brings the total reduction to Rs. 9-10 per unit. The government attributes these savings to the termination of Power Purchase Agreements (PPAs) for five IPPs and the renegotiation of contracts for eight bagasse-fired and 15 other IPPs, which are expected to generate annual savings of Rs. 137 billion. These measures will help cut energy costs by Rs. 1.14 trillion. According to NEPRA, the third quarterly adjustment for FY25 will also apply to K-Electric consumers. However, lifeline consumers benefiting from subsidies will not receive the QTA relief.