Electricity tariff: PM announces '3-month concession' for protected consumers

Govt's move to keep electricity rates stable to benefit 94% household customers, says Shehbaz Sharif

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Prime Minister Shehbaz Sharif (centre) briefing parliamentarians on power sector reforms in Islamabad on July 9, 2024. — PID
Prime Minister Shehbaz Sharif (centre) briefing parliamentarians on power sector reforms in Islamabad on July 9, 2024. — PID

  • Announcement comes amid outcry over massive tariff hike.
  • Subsidy to be funded via budget's development fund: PM.
  • Per unit cost of electricity will be Rs4 to Rs5 per unit, he says.


ISLAMABAD: Prime Minister Shehbaz Sharif on Tuesday announced that the government would not be increasing the electricity rates for protected customers who consume up to 200 units of power for a period of three months.

"The household consumers who consume up to 200 units of electricity will get a subsidy for three months — July, August, September," Prime Minister Shehbaz Sharif told an event in Islamabad.

The announcement comes after public outcry over a government’s decision to massively increase the tariff, touted as a pre-condition to secure the International Monetary Fund's (IMF) loan.

The prime minister, whose government has been under severe criticism for burdening the salaried class through the new budget, said the subsidy would cost the national exchequer Rs50 billion.

"These households make up 94% of the electricity consumers. This subsidy will be funded through our budget's development fund," he said, reminding the nation that the Pakistan Tehreek-e-Insaf (PTI) government had slashed power prices sans allocation in the budget.

PM Shehbaz said under the package, cost of per unit electricity will be Rs4 to Rs5 per unit and consumers of K-Electric will also be eligible for this subsidy.

The premier said the decision has been taken to provide relief to common man in the wake of increase in prices of electricity.

He said these three summer months are the hardest to cope with and ultimately from October onwards as the weather gets pleasant, the electricity consumption also gets down.

Annual power use in Pakistan is expected to fall consecutively for the first time in 16 years, due to higher tariffs curbing household consumption, according to Reuters.

The premier also assured the people of further relief as the government got a fiscal space consequent to its ongoing measures of taxing the elite class, expanding the tax net, closing the non-performing entities and plugging the holes, causing financial leakages.

PM Shehbaz said the government was going to sign a three-year programme with the International Monetary Fund (IMF) and had also taken it on board about the relief announced for the domestic power consumers.

He added that Pakistan has no choice but to enter a new IMF programme and that Islamabad wants to sign a three-year deal.

Pakistan has set a tax revenue target of 13 trillion rupees ($47 billion) for the fiscal year that began on July 1, a near 40% jump from the previous year.

It aims to lower its fiscal deficit to 5.9% of gross domestic product from 7.4% last year.

Power tariff hike

In a bid to unlock the IMF programme of over $6 billion, the federal government earlier this month increased the applicable end-power tariff of protected consumers by up to 51% and unprotected consumers by up to 43%, which was earlier slated to take effect from July 1, 2024 before the PM’s announcement of power subsidy.

Among protected consumers’ categories, tariff for those who fall under the slab of 1-100 units increased by Rs3.95 per unit from Rs7.74 to Rs11.69 per unit, according to The News report.

Also, those protected consumers who fall under the slab of 101-200 will have to at least 41% more as their tariff has increased by Rs4.10 per unit from Rs10.06 to Rs14.16 per unit.

For the unprotected consumers, the first four categories will experience a 22-43% increase in their power tariffs.

The unprotected consumers falling in the slab of 1-100 units a month will experience a maximum hike in the tariff in percentage term as these consumers will pay 43% more in their tariff as their tariff has increased by Rs7.11 per unit to Rs23.59 from Rs16.48 per unit. And those who fall in the slab of 101-200 units a month will pay 31% more as their tariff has swelled by Rs7.15 per unit to Rs30.10 from the existing Rs22.95 per unit.

Those falling under the slab of 201-300 units per month will pay 26% more as their tariff has increased by Rs7.12 per unit because their tariff has escalated to Rs34.26 from Rs27.14 per unit.

Likewise, those who fall in the fourth category of the 301-400 units slab will experience a 22% surge in the tariff as their tariff has jumped by Rs7.12 per unit to Rs39.15 from Rs32.03 per unit.

Similarly, consumers who fall in the category of 401-500 per month unit slab will face 17% increase as their tariff has surged by Rs6.12 per unit to Rs41.36 from Rs35.24 per unit and those using 501-600 units a month will also brave the increase in tariff by 17% as their tariff has swelled to Rs42.78 from 36.66 per unit.

Consumers who utilise 601-700 units a month will face 16% increase as their tariff has gone up by Rs6.12 per unit to Rs43.92 from Rs37.80 per unit and those who consume above 700 units per month will face a 14% hike as their tariff has increased by Rs6.12 per units to Rs48.84 per unit from Rs42.72 per unit.