Winter Power Tariffs
Pakistan is set to implement a reduction in electricity tariffs during the upcoming winter months to promote higher consumption and reduce the reliance on natural gas for heating.
This decision, announced by Power Minister Awais Leghari, aims to ease the financial burden on businesses and citizens, who have faced significant electricity price hikes following energy sector reforms recommended by the International Monetary Fund (IMF).
The government hopes that the reduced tariffs will provide much-needed relief to both individuals and industries. In particular, many businesses in Pakistan have struggled with high electricity costs, and the reduction is expected to alleviate some of the financial pressures.
Moreover, the country’s energy utilities, which often face a drastic reduction in demand during winter months—down by as much as 60% compared to peak summer demand—will also benefit from the plan.
According to Minister Leghari, the reduction in prices is intended to stimulate demand, especially during winter when people typically rely on less efficient and costlier gas heating methods.
This pilot plan will begin this winter, with the lower electricity tariffs set to be in effect from December 2024 to February 2025. The government hopes this will increase electricity use across the country while simultaneously reducing the consumption of expensive natural gas, which is often used for heating.
Pakistan’s power sector has faced difficulties in recent years, with power consumption declining by 8-10% annually over the last three quarters.
However, the government is optimistic that economic recovery will reverse this trend and lead to a modest annual growth in demand, estimated at 2.8% over the next decade.
By cutting electricity tariffs during the winter, the government aims to reduce industrial electricity costs by 7-8% at optimal levels, fostering industrial growth and economic activity.
In addition to the winter tariff reduction, the government is also working on rationalizing power tariffs, restructuring the power sector’s debt, and adjusting tax structures within electricity bills.
Minister Leghari highlighted that talks are underway with development partners to reduce taxes and encourage the growth of electric vehicles as part of a broader effort to combat air pollution and transition to cleaner, more sustainable energy solutions.
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