PM Shehbaz unveils Rs7.41 per unit electricity rate cut to boost ailing economy

In a bid to revive the ailing economy, Islamabad announced the reduction of electricity tariff by Rs7.41 per unit. Prime Minister Shehbaz Sharif announced the long-awaited decrease in electricity prices during a ceremony on Thursday.

“For residential consumers, we have decided to reduce the electricity rates by Rs7.41 per unit, after which electricity will be provided at Rs34.37 per unit. Similarly, for commercial users, we have decided to reduce the electricity rates by Rs7.59 per unit,” he said.

PM likely to announce power rate cut today

The development comes as power generation in Pakistan clocked in at 6,945 GWh in February 2025, the lowest in five years, a steep decline of 15% MoM compared to the previous month, suggesting a decline in economic activity.

“Unless we significantly cut electricity rates, Pakistan’s industry, agriculture, trade or exports cannot grow,” the prime minister noted adding that the government managed to reduce the electricity rates after much deliberations with the IMF.

“We need to honour the conditions inked with the IMF,” he said.

He said that the latest measures will allow Pakistani industries to achieve competitiveness on the international stage.

PM Shehbaz said the government needs to “immediately privatize or provincialize Discos”.

The prime minister also lauded his team for their successful engagement with IPPs. “Through these negotiations, the government has managed to save Rs3,669 billion, which was payable to the IPPs in the coming years.”

“Arrangements have also been made for the resolution of Rs2,393 billion in circular debt.”

He said that the economy has achieved fundamental stability, “now it’s time to achieve economic progress”.

The prime minister also lauded the role of Army Chief Gen Asim Munir for his support towards the government’s economic reform agenda.

PM Shehbaz said Pakistan need “a surgical operation to achieve its due position on the global stage, for which we need to make difficult but correct decisions”.

He added that the inflation rate has declined considerably from a record 38%, while petrol rates in Pakistan are among the lowest in the region.

“The policy rate has reduced from 22.5% to 12%, which will give impetus to businesses,” he added.

He said that decisions for privatization and rightsizing are essential to achieve organic growth.

Federal Minister for Energy, Sardar Awais Leghari in his earlier address lauded the role of his team and the leadership of PM Shehbaz in managing energy sector woes.

As per reports, the price reduction stems from several strategic measures, including the termination of agreements with six Independent Power Producers (IPPs) and the renegotiation of contracts with 16 other IPPs under a take-and-pay model.

Additionally, the conversion of bagasse power plants’ currency from US dollar to Pakistani rupees and a reduction in the return on equity (ROE) for government power plants to 13%, fixed at an exchange rate of Rs168, have been critical in recalibrating electricity tariffs.

This electricity price reduction is part of Prime Minister Sharif’s broader economic agenda, which aims to alleviate the financial burden on consumers while maintaining compliance with IMF guidelines.

As the country grapples with economic challenges, including inflation and energy shortages, experts say that today’s announcement signals a significant step towards easing public discontent and restoring confidence in the government’s fiscal management.

Last month, the International Monetary Fund (IMF) allowed the government to reduce electricity tariff by Re1 per kilowatt-hour for all consumers in Pakistan.

This relief will be financed through revenue collected from levies imposed on captive power plants (CPPs), said Mahir Binici, IMF Resident Representative in Pakistan.