Govt Announces Major Relief in Electricity Tariffs Across Multiple Sectors

The federal government has announced major relief in electricity tariffs across multiple consumer categories while maintaining the base tariff unchanged for 2026, despite a recommendation by NEPRA to reduce it.

Industrial electricity tariffs have been reduced by 26%, bringing the rate down from Rs. 62.99 per unit to Rs. 46.31 per unit, according to Power Division officials.

The National Electric Power Regulatory Authority had approved a reduction of Rs. 0.62 per unit in the base tariff and forwarded its decision to the federal government. Under NEPRA’s determination, the base tariff for 2026 was reduced from Rs. 34 per unit to Rs. 33.38 per unit following a public hearing.

However, the government opted to keep the base tariff unchanged for the upcoming fiscal year. Despite the decision on the base tariff, significant relief has been announced for various consumer categories as part of broader power sector reforms. Cross subsidy has been substantially reduced by Rs. 123 billion, decreasing from Rs. 225 billion to Rs. 102 billion, officials said.

As a result of these adjustments, the national average electricity tariff has declined from Rs. 53.04 per unit to Rs. 42.27 per unit. The agricultural sector will benefit from a 16% reduction in electricity tariffs, while commercial consumers will see a 10% decrease in their rates.

Tariffs for general services have been cut by 12%, and bulk consumers will receive a 15% reduction in their electricity rates. A significant reduction has been approved for Azad Jammu and Kashmir, where electricity tariffs have been slashed by 46%, according to the briefing given to authorities.

Power Division officials stated that these measures aim to enhance industrial competitiveness, reduce the cost of doing business and provide targeted relief while ensuring the financial sustainability of the power sector.

The decision to maintain the base tariff despite NEPRA’s recommendation suggests the government is balancing the need for consumer relief with the financial viability of power distribution companies.

The 26% cut in industrial tariffs is expected to provide a major boost to Pakistan’s manufacturing sector, which has long complained about high energy costs affecting competitiveness in regional and global markets.

The substantial reduction in cross-subsidy indicates a move toward more rationalized electricity pricing, bringing consumer categories closer to cost-reflective tariffs. The reforms come as Pakistan works to address circular debt issues in the power sector while meeting conditions under its IMF programme.

Industry representatives have welcomed the tariff reductions, saying lower electricity costs will help improve export competitiveness and attract investment in manufacturing.

The new tariff structure will take effect from the start of fiscal year 2026, providing immediate relief to industrial, agricultural and commercial consumers across the country.