By Ariba Shahid
KARACHI (Reuters) – Pakistan will reduce electricity rates during the winter in a bid to boost consumption and reduce heating use, its energy minister told Reuters on Saturday.
The move is expected to provide relief to businesses and citizens, who have suffered sharp and sudden increases in electricity rates following energy sector reforms suggested by the International Monetary Fund (IMF).
Utilities in Pakistan, many of which have had to reduce or even completely suspend operations in the winter months as demand fell by up to 60% from summer peak levels, will also benefit. of the measure.
“Reducing prices will increase demand, especially in winter when people use inefficient gas resources,” Energy Minister Awais Leghari told Reuters in a telephone interview.
Pakistan will pilot the plan starting this winter and the lowest rates will apply between December 2024 and 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 heat during the winter.
Power consumption in Pakistan has declined by 8-10% year-on-year over the last three quarters, Leghari said. But it said it expects an economic recovery to cover lost ground and help boost demand by a net average of 2.8% annually over the next ten years.
Leghari hopes the move will reduce winter tariffs to help industries reduce electricity costs by 7% to 8% to an optimal level, while spurring industrial growth in the process.
Leghari also said the government is working to rationalize electricity tariffs, redefine power sector debt and adjust tax structures within electricity bills.
“The government is in talks with development partners to reduce taxes to stimulate the growth of electric vehicles and combat the emerging problem of air pollution, promoting a shift from combustion-based transport towards clean energy,” he said.