Businesses and consumers prepare to celebrate as they may soon see a reduction in their utility bills of up to PKR 8.55 billion. This is because the Central Power Purchasing Agency-Guaranteed (CPPA-G) has proposed for Discos (electricity distribution companies) to decrease the per unit price of electricity by PKR 0.7.
The lower cost of electricity will serve to greatly benefit households and industries, which consume 47 per cent and 28 per cent of the electricity used, respectively. Businesses in the cement, steel and textiles sectors stand to benefit in the form of higher profits, as they are large consumers of electricity.
Textile exporters stand to benefit the most as their products will become more attractive to customers in international markets due to their lower prices. Textile exports already stand at an impressive USD 16.655 billion in 2023, with more to gain if the proposal goes through.
While discos are to return this amount, this won’t be too tough on most of them as they are owned by the government directly. However, the owners of K-electric will not be too thrilled if the proposal is accepted, as it is privately owned, and it will reduce earnings due to the PKR 0.7 negative adjustment.
For average households and above, this adjustment will reduce the monthly electricity bill by about PKR 150 to PKR 450, resulting in them having more money available. When this money is available to consumers, it will likely create more sales for the goods and services of local businesses.
Aside from the negative adjustment charges, the coming of winter will also greatly reduce the average electricity bills, allowing local businesses to cash in on consumers having more money available.
The reduced electricity bills are likely to help grow local businesses while also improving the overall standard of living for Pakistanis. However, businesses are experiencing uncertainty in decision-making with the constantly changing electricity tariffs and adjustment charges.
While there is a negative adjust charge right now, many speculate that discos are likely to advocate for higher tariffs in the near future to recuperate any losses.
Businesses are aware of this potential scheme and are weary of the constant changes in electricity, which is a major input in the production of most goods.
