New Electricity Pricing Plan Announced for Pakistan’s Industries and Agriculture
In a significant announcement on Thursday, Prime Minister Shehbaz Sharif introduced a new electricity pricing plan designed to invigorate Pakistan’s industrial and agricultural sectors. Under this plan, the price is set at Rs23 per unit, a substantial reduction from previous rates. This pricing model is termed subsidy-neutral and cost-plus, aimed at making electricity more affordable while encouraging higher consumption.
The initiative, aptly named the "Roshan Maeeshat Electricity Package," targets a 25% increase in electricity consumption compared to last year. However, it’s essential to note that this benefit only applies to the additional 25% consumption, meaning consumers need to step up their usage to take full advantage of the reduced rates.
At a meeting with business representatives, the Prime Minister highlighted that the tariff for industrial consumers has been slashed from Rs34 to Rs22.98, a remarkable reduction of 32.4%. Similarly, agricultural consumers can now enjoy a rate cut from Rs38 to Rs22.98, representing a 39.5% reduction.
Federal Minister for Power, Sardar Awais Leghari, explained that the 25% increase in usage would be based on collective consumption across sectors, providing flexibility for individual customers. Unfortunately, the overall electricity demand from the national grid has fallen by 9% over the past year, prompting the government to implement this plan to stimulate demand.
While there’s a clear strategy to eliminate subsidies, the government aims to boost the national grid with an estimated 600 to 1,000 megawatts of additional consumption, potentially stabilizing tariffs and reducing blackout risks. The plan is designed to foster industrial growth by about 0.5% annually, which could add a significant Rs21 billion to Pakistan’s national exchequer.
However, the conditions imposed by the International Monetary Fund (IMF) are tightly woven into this package. The IMF has mandated that all industries pay a uniform rate and that consumption must surpass the established baselines for consumers to benefit from the reduced prices. Additionally, this scheme is to be terminated in three years without the possibility of rollover.
In a bid to address the growing shift toward solar energy—where over 90% of consumers have turned to solarization—the government has also introduced plans to utilize 7,000 MW of surplus power in an effort to keep customers connected to traditional electricity sources.
In conclusion, while the new electricity pricing plan offers some promising advantages for the industrial and agricultural sectors, it comes with strict parameters. It will be interesting to observe how these changes impact electricity consumption and the broader economy over the coming years.
For those looking to stay informed and engaged with the latest developments in Pakistan’s energy sector and beyond, connecting with resources such as Pro21st can provide valuable insights and updates.
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