The government has proposed potential reductions in electricity rates for industrial consumers and tax relief for salaried workers amid rising economic challenges. This comes as state-owned power distribution companies have requested a significant 400 percent increase in security deposits from consumers.
At a Pakistan Business Council event, Finance Minister Muhammad Aurangzeb acknowledged the “disproportionately high tax burden” on the salaried class and suggested measures to ease this pressure. Although he was uncertain about changes to tax slabs in the upcoming budget due to the ongoing IMF programme, he assured that the tax filing process for salaried individuals would be simplified, reducing the need for tax consultants.
Minister Aurangzeb also expressed optimism about a further decline in the policy rate, given falling inflation, and mentioned that large businesses were now borrowing at interest rates below 11 percent. With foreign exchange reserves reaching $13 billion, sufficient to cover almost three months of imports, he emphasized that the government was working to improve Pakistan’s credit rating.
As for the budget process, he stated that it had begun in January, with plans to engage various sectors, including trade bodies, in discussions. However, he reiterated that Pakistan’s commitments under the three-year IMF programme would guide government policies.
In the power sector, Minister Awais Ahmad Khan Leghari highlighted ongoing reforms, including the government’s plan to offer electricity to industrial consumers at marginal cost, with a focus on reducing rates for Greenfield projects like data centers and IT businesses. He revealed that industrial electricity tariffs had already been reduced by Rs11 per unit since June 2024.
The government is also reviewing tariff structures for nuclear, hydropower, and Chinese power plants as part of its efforts to tackle circular debt and lower electricity prices sustainably. Leghari added that a uniform electricity tariff across the country was not feasible, especially as privatization efforts continue.
In a concerning move, power distribution companies have submitted requests to the National Electric Power Regulatory Authority (Nepra) for a 400 percent increase in security deposits for consumers in lower billing slabs. These proposed increases aim to cover potential defaults and reflect the sharp rise in electricity rates since 2008. If approved, the new rates would apply to new connections, reconnections, changes in sanctioned load, and tariff category adjustments.
