Summary:
- Prime Minister Shehbaz Sharif vows to cut electricity prices to support the economy and export competitiveness, despite recent tariff hikes.
- The government plans to rationalize power tariffs and address inefficiencies in power distribution, including the potential closure of some Independent Power Producers (IPPs).
- Sharif emphasizes the need for reform within electricity distribution companies (Discos) and warns of serious consequences for underperformance.
Prime Minister Shehbaz Sharif has pledged to lower electricity tariffs to provide relief to inflation-stricken citizens and bolster economic stability. Addressing the newly appointed chairmen and board members of electricity distribution companies (Discos) on August 13, Sharif emphasized that reducing power prices is crucial for improving the competitiveness of exports and stabilizing the economy. This commitment comes as the government faces backlash for recent tariff increases mandated by the International Monetary Fund (IMF).
Last month, the National Electric Power Regulatory Authority (Nepra) approved a significant increase in the base tariff, which now stands at up to Rs48.84 per unit for domestic consumers. Despite this, households using up to 200 units per month will be exempt from the hike for three months. In response to criticism, Sharif outlined plans to rationalize tariffs by potentially slashing the development budget and closing down some government and private Independent Power Producers (IPPs). However, these proposals await IMF approval.
Sharif underscored the importance of low-cost electricity and efficient power transmission for economic stability. He warned that those in Discos failing to drive improvements would face removal. The Prime Minister highlighted the pressing issues of power theft and mismanagement, with theft estimated to cost around Rs500 billion annually and the circular debt soaring to Rs2,300 billion. He called for immediate action, including the introduction of smart meters and a shift towards coal-powered plants to save $1 billion annually.
Recalling past successes, Sharif noted the efficiency of LNG plants installed during Nawaz Sharif’s tenure and expressed hope for similar advancements under his administration. He stressed that significant reforms are needed to overcome the current challenges in the power sector.
