Pakistan keeps fuel prices unchanged, plans power tariff cuts for public relief

ISLAMABAD: Prime Minister Shehbaz Sharif announced on Saturday the government will maintain current petroleum product prices for the another fortnight and utilize the resulting fiscal space to implement a reduction in electricity tariffs, aiming to provide relief to consumers.

Fuel prices in Pakistan are adjusted fortnightly, reflecting global energy market fluctuations and the rupee-dollar exchange rate, to pass on the net effect to consumers.

Since fuel is a key input for thermal power generation, keeping petroleum prices unchanged can create fiscal space for the government to lower electricity tariffs and making it more affordable for consumers.

“We have decided to maintain petroleum prices at their previous levels and transfer the entire financial advantage to the public through reduced electricity tariffs,” the prime minister said in a statement released by his office.

“This measure, among many others, will lead to a meaningful decrease in electricity rates.”

Sharif also said that a comprehensive and effective strategy was being finalized to reduce electricity charges, with details to be announced in the coming weeks.

“Since assuming office, we pledged to prioritize public relief,” he said. “This relief will not only lower electricity prices but also have an overall impact on inflation, leading to a further decline.”

Both fuel prices and electricity tariffs are sensitive issues in Pakistan, which experienced an inflation rate hitting about 38 percent in 2023.

Subsequent stringent monetary policies have significantly reduced inflation, with the latest figures indicating a drop to 1.5 percent in February, marking a nine-year low.