By Ariba Shahid
KARACHI (Reuters) – Pakistan will reduce electricity tariffs during winter in a bid to boost consumption and cut the use of natural gas for heating, its power minister told Reuters on Saturday.
The move is expected to provide relief to businesses and citizens, who have suffered from steep and sudden increases in electricity tariffs following energy sector reforms suggested by the International Monetary Fund (IMF).
Utilities in Pakistan, many of which have had to curtail or even completely cease operations in winter months due to demand dropping by up to 60% from peak summer levels, will also benefit from the move.
“Reducing prices will increase demand, especially in winter when people use inefficient gas resources,” Power Minister Awais Leghari told Reuters in a telephone interview.
Pakistan will pilot the plan starting this winter, and the lower tariffs will apply between December 2024 to February 2025, he said.
The IMF, which approved a $7 billion, 37-month loan for Pakistan in September, did not immediately respond to a request for comment.
Pakistan relies heavily on expensive natural gas and burning wood for heating during winter.
Power consumption in Pakistan has declined 8-10% year on year over the past three quarters, Leghari said. But he said he hopes that an economic recovery will cover up for lost ground and will help boost demand by a net average 2.8% annually over the next ten years.
Leghari expects the move to slash winter tariffs to help industries reduce electricity costs by 7-8% at an optimal level, while stimulating industrial growth in the process.
Leghari also said the government is working to rationalize power tariffs, re-profile power sector debt and adjust tax structures within electricity bills.
“The government is in talks with development partners to reduce taxes to spur growth of electric vehicles and combating the emergent problem of air pollution, promoting a shift away from combustion-based transportation towards clean energy,” he said.