Pakistan to lower electricity prices in winter to stimulate demand, cut gas consumption By Reuters
Written by Ariba Shahid
KARACHI (Reuters) – Pakistan will reduce electricity prices in the winter with the aim of increasing electricity consumption and reducing the use of heating equipment, the energy minister told Reuters on Saturday.
This move is expected to provide relief to businesses and residents, who have suffered from a sudden and high increase in electricity costs following the energy sector reforms proposed by the International Monetary Fund (IMF).
Utilities in Pakistan, many of which have had to reduce or completely stop operations in the winter months due to demand dropping by 60% from peak summer levels, will also benefit from the move.
“Cutting prices will increase demand, especially in winter when people use less efficient gas sources,” Energy Minister Awais Leghari told Reuters in a telephone interview.
Pakistan will test the program from this winter, and the lower prices will be in effect between December 2024 and February 2025, he said.
The IMF, which approved a $7 billion, 37-month loan to Pakistan in September, did not immediately respond to a request for comment.
Pakistan relies heavily on expensive natural gas and wood burning to keep warm in winter.
Electricity consumption in Pakistan has decreased by 8-10% year-on-year in the last three quarters, Leghari said. But he said he was optimistic that the economic recovery would make up for lost ground and help boost demand by a total of 2.8% annually over the next decade.
Leghari expects the move to reduce winter tariffs to help industries reduce electricity costs by 7-8% at a reasonable rate, while encouraging industrial growth in the process.
Leghari also said that the government is working to adjust the electricity prices, restructure the debt of the power industry and adjust the tax structures within the electricity bills.
“The government is in discussions with its partners in development to reduce taxes to encourage the growth of electric vehicles and to combat the emerging problem of air pollution, to encourage the shift from electricity-based transportation to clean energy,” he said.
