Govt unveils plan to cut electricity bills in 2026

ISLAMABAD: The federal government has started planning to provide relief to electricity consumers by reducing power rates, following an agreement with the International Monetary Fund (IMF).

The government will impose a captive power levy on power plants, and the money collected from this levy will be used to lower electricity rates, giving relief to consumers over time. The federal cabinet has already approved this decision to pass the benefits of the levy to electricity users.

How It Will Work

Instead of adjusting rates every month, electricity rates will now be updated every two months based on the levy collected.

A phased approach has been introduced for the 20% captive power levy:

• Stage 1: 5% levy applied immediately

• Stage 2: 10% levy

• February 2026: 15% levy

• August 2026: 20% levy

The funds from these levies will help reduce electricity tariffs for all consumers.

In case a power plant fails to pay the levy, action will be taken, and persistent defaulters may have their gas supply cut off. Each captive power plant must pay the levy according to its gas or LNG usage.

This plan is expected to gradually lower electricity bills and provide financial relief to consumers across Pakistan.

Read More: Karachi schools to remain closed on January 9 – check details