The Federal Board of Revenue (FBR) generated Rs490 billion in revenues in fiscal year (FY) 2024-25 from Withholding Tax (WHT) and General Sales Tax (GST) from electricity bills. According to reports, these revenues have declined by approximately 20 percent on a year-on-year basis, falling by Rs110 billion from FY 2023-24.

 

Reports indicate that the drop in revenue from electricity bills is a direct consequence of a fall in total power usage. As per the data, during the first nine months of FY 2024-25, total power usage by consumers recorded a sharp 3.6 percent decline.

 

Total power usage fell from a respectable 83,109 GWh to just 80,111 GWh during the aforementioned period. Data from reports suggests that industrial electricity usage logged a sharp fall too, falling to 21,082 GWh in FY 2024-25  from 28,830 GWh in FY 2023-24.

 

It merits a mention that Pakistan’s power capacity exceeds usage. Recent reports have outlined how excess capacity continues to place financial strain on users of the national grid as idle power plants continue to receive capacity payments. According to the latest Economic Survey, Pakistan’s total power generation capacity was projected to rise to a staggering 46,605 megawatts (MW) before the start of fiscal year (FY) 2025-26.

 

The current capacity payment burden stands at an extortionate Rs12 to Rs15 per unit. Details from reports suggest that the financial strain of capacity payments is more pronounced during winter months as electricity demand plummets to as low as 12,000 MW. However, users of the national grid cannot use up excess power even in the summer months.

 

During the first nine months of FY 2024-25, power consumption remained at 80,111GWh, whereas electricity generation dwarfed consumption, standing at 90,145GWh. The breakup of power consumption reveals that households, industries, commercial users and the agriculture sector use up 49.6 percent, 26.3 percent, 8.6 percent and 5.7 percent, respectively.

 

It merits a mention that the federal government has attempted to boost power consumption levels up by getting a waiver that would allow surplus power capacity to be provided at a lower rate. As per reports, the waiver would have created provisions for 7,000 megawatts (MW) of electricity.

 

Islamabad’s motivation behind the provision of power at lower rates lies in increasing economic output. This is because lower power rates to new entrants would yield higher industrial output.

 

However, the International Monetary Fund (IMF) did not support the scheme as it believed that the current state of the economy is a direct consequence of the distribution of similar allowances in the past.