Sigh of relief for masses as govt announces Rs7.41 per unit cut in electricity tariff

• Domestic consumers to get electricity at Rs34 per unit.
• Utility's rates for industrial units slashed by Rs7.59 per unit.
• Plan devised to address Rs2,393bn circular debt issue: PM.

Prime Minister Shehbaz Sharif on Thursday announced a significant reduction in the electricity prices of up to Rs7.69 per unit for the consumers, pledging to provide further relief in near future through structural reforms in the power sector.

The prime minister, addressing a ceremony to unveil the package, said that the average per unit price for the domestic consumers had been brought down by Rs7.15 and Rs7.69 industrial sector.

“In June 2024, the per unit price for industrial sector was Rs58.5 which was first reduced by Rs10.3 and further by Rs7.69,” he added.

The prime minister pointed out that the government was taking structural reforms especially in power sector to ensure further relief for the consumers and overall development of the country.

“This reduction will help industrialists to produce cheaper and more competitive products,” he added.

He noted that the common people had to suffer a lot in the the past due to high inflation rate and electricity bills. However, he assured that the government was taking further steps to provide maximum relief to them.

Highlighting the structural reforms to be taken in power sector, the prime minister said the government will ensure halting power theft which was around Rs 600 billion per year. Similarly, he said by establishing open market, the electricity tariffs will be further decreased.

He said there was no option but to privatise or commercialize Power Distribution Companies (DISCOs) to reduce the burden of line losses and power theft on the national exchequer.

“I have directed the team concerned to work diligently to implement reforms in the sector as soon as possible,” he added.

Appreciating the task force formed to finalise power reforms, the prime minister said the force worked really hard and through their innovative thoughts, they brought different options and managed to convince the IMF to reduce the power tariffs.

“We did not pass on the low international petroleum prices and retained the prices to ensure that the government will reduce the power tariffs to which IMF agreed in principle,” he added.

He said the trust with the IMF that was breached in 2020, was now being restored.

Similarly, he said the government successfully negotiated with the Independent Power Producers (IPPs), and praised the government team, led by Sardar Awais Ahmad Khan Leghari, for their commendable efforts.

“After negotiation with the IPPs, our team managed to save Rs3,696 billion that were to be paid to the IPPs,” he added.

Likewise, he added that the government was also facing an immense challenge of circular debts of Rs2,393 billion.

However, he informed that the government had also made arrangements to gradually but permanently solve this problem within five years.

He also extended his gratitude to his leader and PML-N President Muhammad Nawaz Sharif and the allied political party leadership for their support and guidance in this regard.

Recalling the time when he took over the charge of the premier, he said Pakistan was on the verge of being default at that time and the nation, especially business community was afraid about the future of the country.

He said the government even had to face difficulties to open LCs for importing petroleum products and other essential items. “We did not have resources to even run the power sectors as well.”

The elements who were responsible for all these wrongs, were exited to see Pakistan going to default and were claiming that no one could save Pakistan from being default now, he added.

He said such elements crossed all limits, and it was the same group that breached its own agreement with the International Monetary Fund (IMF).

Later on, he said the same party also created hurdles in the way of the government’s negotiations with the IMF. “By doing this, they tried to save their own politics at the cost of the country’s interests,” he added.

“This is the Almighty’s blessing Who accepted the government’s hard work and saved the country from default”.

PM Shehbaz said Pakistan’s economy had now become stabilized and was moving towards sustainable growth and development.

He said during the process of macroeconomic stability, Chief of Army Staff (COAS) Gen Asim Munir played key role whose support was worth appreciation.

He also acknowledged the sacrifices of the people who suffered a lot due to high inflation.

“The country’s economy badly needed a surgical operation to get rid of all the issues responsible for the crisis in economic sector,” he added.

He said that PML-N President Nawaz Sharif, during election campaign had committed to bring the inflation rate that peaked at 38% down to single digit by 2026.

“By the grace of Allah Almighty and due to the government team efforts, the inflation had now eased to as low as to around 1.5% even a year ahead.

He said that in one year, the government had also reduced the petroleum prices by Rs38 to the lowest in the region.

The policy rate, he said that was 22.5%, had been lowered to 12% due to which the business community got immense relief.

He emphasized that right sizing and privatization of the government owned entities was the part of difficult decisions which had to be made now. “The government have to face a huge loss of Rs800 billion due to the loss making SOEs.”

He said all the government efforts will go in vain if it did not take action to get rid of these huge losses.

The prime minister informed that this year, the government was going to collect taxes 35% more than the last year.

— With additional input from APP.