Government Seeks Donors to Cut Power Tariffs

The government presented a new package to foreign donors for a potential reduction of up to Rs10.5 per unit in electricity prices for industrial and agricultural consumers. This move aims to boost demand, which has decreased by 20% due to high prices. The Minister for Power, Sardar Awais Laghari, discussed the Industrial Support Package (2026-28) with international development organisations to seek their support. The package received positive feedback from lenders, but concerns were raised about the sustainability of increased demand and the reliability of the national grid.

The proposal includes reducing the current average electricity price of Rs33.5 per unit by Rs10.5 for incremental electricity use. The government plans to set industrial connection rates at Rs22.98 per unit and offer benefits to the agricultural sector at Rs7.77 per unit. The price reduction will only apply to additional electricity use compared to consumption from December 2023 to November 2024.

The government claims the package will be cost-neutral and a subsidy, aiming to address concerns raised by the IMF. However, the exclusion of debt servicing surcharge and tariff adjustments from the industrial support package may impact residential consumers. Concerns also exist about discrimination between provinces and the sustainability of the package without addressing underlying power sector issues.

Foreign diplomats were briefed on ongoing reforms, but concerns remain about delays in initiatives and unresolved issues in the power sector. Donors advised the government to focus on long-term solutions to restore industrial demand on the grid.

According to the source: The Express Tribune.