Govt seeks further cut in power tariff burden on industry

January 15, 2026 (MLN):  The government is exploring additional measures to further reduce the cross-subsidy burden on industrial electricity consumers, including subsidy reforms and debt refinancing, alongside tariff reduction initiatives already implemented.

According to the Power Division, the industrial cross-subsidy burden has fallen sharply from Rs 225bn, or Rs 8.9 per unit, in March 2024 when the current government took office to Rs 102 bn, or Rs 4.02 per unit, at present.

This marks a significant reduction of Rs 123bn.

It was noted that industrial electricity tariffs, inclusive of taxes, declined from Rs 62.99 per unit in March 2024 to Rs 46.31 per unit by December 2025.

During the same period, the national average electricity tariff decreased from Rs 53.04 per unit to Rs 42.27, APP reported.

To further bring down power prices, the government has terminated inefficient power plants and successfully renegotiated contracts with several Independent Power Producers (IPPs), resulting in tariff relief.

Negotiations with the remaining IPPs are ongoing to secure additional reductions, the Power Division said.

The government has also introduced a surplus power package under which industrial and agricultural consumers can access additional electricity at a reduced rate of Rs 22.98 per unit for a period of three years.

This initiative is aimed at lowering average industrial tariffs and improving competitiveness.

In addition, a Circular Debt settlement plan has been launched to clear outstanding liabilities within the next five to six years.

Once the debt is eliminated, the existing debt surcharge of Rs 3.23 per unit will be withdrawn, providing further relief to consumers.

The statement highlighted that the growing number of off-grid solar consumers has distorted subsidy requirements, with the number of protected consumers doubling from 11 million in 2021 to 22 million in recent years due to hybrid consumption patterns.

This shift has placed added pressure on fiscal resources and increased the cross-subsidy burden on industrial and commercial consumers.

It further noted that commercial, bulk, and higher-consuming domestic users are paying a higher level of cross-subsidy than industrial consumers.

While electricity tariffs reflect the government’s broader socio-economic policy rather than a pure cost-recovery mechanism, the government remains committed to exploring further options such as subsidy restructuring and debt refinancing to reduce the burden on industrial consumers and support economic growth.

Copyright Mettis Link News