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ISLAMABAD, Jan 14 (APP):The Power Division on Wednesday said that the government has achieved a substantial reduction in the industrial cross-subsidy burden and electricity tariffs through wide-ranging reforms, aimed at enhancing industrial competitiveness and easing pressure on consumers.
In a statement, the Power Division said that the industrial cross-subsidy burden had been reduced from Rs 225 billion (Rs 8.9 per unit) in March 2024, when the present government assumed office, to Rs 102 billion (Rs 4.02 per unit) at present, reflecting a significant reduction of Rs 123 billion.
The statement further said that industrial electricity tariffs, including taxes, declined from Rs 62.99 per unit in March 2024 to Rs 46.31 per unit by December 2025, while the national average tariff reduced from Rs. 53.04 to Rs. 42.27.
The Power Division said that to further reduce electricity prices, the government terminated inefficient power plants and successfully renegotiated contracts with Independent Power Producers (IPPs), resulting in tariff relief. It added that negotiations with remaining IPPs were continuing to secure additional reductions.
The government has also offered a surplus power package, allowing industrial and agricultural consumers to avail additional electricity at a reduced rate of PKR 22.98 per unit for three years, helping to reduce average industrial tariffs, it added.
Additionally, the government has launched a Circular Debt settlement plan to eliminate outstanding debt within 5–6 years. Once cleared, the debt surcharge currently charged at Rs. 3.23 per unit will be removed, providing further tariff relief to consumers.
The statement noted that it is important to highlight that the off-grid solar consumers have distorted the subsidies requirement, doubling protected consumers from 11 million in 2021 to 22 million recently, due to hybrid consumption strategies.
This trend, it said, had placed additional strain on fiscal resources and increased the cross-subsidy burden on industrial and commercial consumers, adversely affecting their competitiveness.
The cross subsidy paid by commercial, bulk and higher consuming domestic consumers is far above the level of cross subsidy being paid by industry.
Although the tariffs reflect Government’s broader socio-economic policy, not merely the recovery mechanism, the Government is exploring various other options to further reduce the cross-subsidy burden from industrial consumers, including subsidy reforms and debt refinancing, in addition to the above tariff reduction measures already in place, the statement said.