The Power Division has announced that the industrial cross-subsidy burden has been reduced from Rs225 billion (Rs8.9 per unit) in March 2024, when the current government took charge, to Rs102 billion (Rs4.02 per unit) now, which represents a substantial reduction of Rs123 billion.

The industrial tariff, including tax, dropped from Rs62.99 per unit in March 2024 to Rs46.31 per unit by December 2025, while the national average tariff decreased from Rs53.04 to Rs42.27 per unit, the division said in a statement issued on Wednesday.

To reduce electricity tariffs, it mentioned, the government had terminated operations of inefficient power plants and renegotiated contracts with the independent power producers (IPPs). “These actions have resulted in tariff reductions and further negotiations with the remaining power producers are in progress.”

The Power Division recalled that the government also offered a surplus power package, allowing industrial and agricultural consumers to consume additional electricity at a reduced rate of Rs22.98 per unit for three years, helping to push down average industrial tariffs.

“Additionally, the government launched a circular debt settlement plan to eliminate the outstanding debt within five to six years. Once cleared, the debt surcharge currently charged at Rs3.23 per unit will be removed, providing further tariff relief to consumers,” added the division.

It highlighted that off-grid solar consumers distorted the subsidy requirement, doubling the protected consumers from 11 million in 2021 to 22 million recently, due to hybrid consumption strategies.

“This not only constrained fiscal resources but also increased the burden via cross-subsidy on industrial and commercial users, eroding their competitiveness,” the Power Division said. “The cross-subsidy paid by commercial, bulk and higher consuming domestic consumers is far above the level of cross-subsidy being paid by the industry.”

It emphasised that although the tariffs reflect the government’s broader socio-economic policy, not merely the recovery mechanism, the government is exploring various other options to further reduce the cross-subsidy burden from industrial consumers, including through subsidy reforms and debt refinancing, in addition to the above tariff reduction measures already in place.