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Pakistan has reduced the cross-subsidy burden on industrial electricity consumers by Rs123 billion since the current government assumed office, according to the Power Division.
In a statement issued on Wednesday, the division said the industrial subsidy burden has declined from Rs 225 billion in March 2024 to Rs 102 billion at present. On a per-unit basis, this represents a drop from Rs 8.9 to Rs 4.02 per unit. Officials said the reduction is part of broader efforts to improve industrial competitiveness and ease cost pressures on businesses.
Decline in Electricity Tariffs
The Power Division reported a significant fall in electricity tariffs over the past year and a half, benefiting both industrial consumers and the national average.
| Category | March 2024 | December 2025 |
|---|---|---|
| Industrial tariff (incl. tax) | Rs62.99/unit | Rs46.31/unit |
| National average tariff | Rs53.04/unit | Rs42.27/unit |
How Tariffs Were Reduced
According to the Power Division, the decline in tariffs was achieved through multiple policy actions, including:
- Closure of inefficient power plants
- Renegotiation of contracts with independent power producers (IPPs)
- Ongoing talks with remaining power producers to secure further cost reductions
The government also introduced a surplus power package, allowing industrial and agricultural users to consume additional electricity at a reduced rate of Rs22.98 per unit for a three-year period. This measure helped lower the overall average industrial tariff.
Circular Debt Reforms
The Power Division said a circular debt settlement plan has also been launched, with the aim of clearing outstanding liabilities within five to six years. Once the debt is eliminated, the Rs3.23 per unit debt surcharge currently charged to consumers will be removed, offering additional tariff relief across the board.
How Solar Use Affects Subsidies
The statement noted that the rise in off-grid and hybrid solar usage has distorted subsidy requirements. The number of protected electricity consumers has doubled from 11 million in 2021 to 22 million, increasing fiscal pressure.
This shift, officials said, has pushed a larger share of the subsidy burden onto industrial and commercial consumers, reducing their competitiveness. The division added that commercial and high-consumption domestic users now bear a higher cross-subsidy load than industry.
While stressing that electricity tariffs reflect broader socio-economic policy goals, the Power Division said the government is exploring additional options to further reduce the burden on industrial consumers.
These include subsidy reforms, debt refinancing, and other structural measures, alongside the tariff reductions already implemented.
