Electricity Tariff
ISLAMABAD: The International Monetary Fund (IMF) has approved a reduction of Re1 per unit in electricity tariffs, providing much-needed relief to all categories of consumers. The measure is expected to ease the financial burden on households and businesses alike.
According to IMF officials, the tariff relief will be applicable to all electricity users and will be funded through revenue collected from the levy imposed on captive power plants that operate on gas. This initiative is part of a broader effort to balance financial pressures while ensuring fiscal stability.
The decision follows a staff-level agreement (SLA) between the Washington-based lender and the Pakistani government regarding the first review of the country’s ongoing 37-month bailout program.
The agreement, which still requires formal approval from the IMF’s Executive Board, will allow Pakistan to access approximately $1 billion under the Extended Fund Facility (EFF). This will bring the total disbursements under the program to around $2 billion, providing critical financial support to the country’s struggling economy.
Government sources indicate that the reduction in electricity tariffs by Re1 per kilowatt-hour is projected to provide a collective financial relief of approximately Rs100 billion to consumers.
For an average household consuming around 500 units of electricity per month, this translates to a reduction of Rs500 in their monthly electricity bill, offering significant respite amid rising inflation.
The approval from the IMF comes just days after Pakistan’s Power Minister, Awais Leghari, reaffirmed the government’s commitment to lowering electricity tariffs.
He assured the public that the reduction would take place at the “right time,” emphasizing that the current government’s promises are backed by action, unlike those made by previous administrations. Prime Minister Shehbaz Sharif is expected to formally announce the tariff cut soon.
In addition to this reduction, the government is working on a broader relief package for electricity consumers, which will also require the IMF’s endorsement. The details of this package are expected to be unveiled in the coming weeks.
Interestingly, independent power producers (IPPs) have also offered to reduce electricity tariffs by up to Re0.50 per unit. Furthermore, they have proposed waiving over Rs11 billion in late payment surcharges, but only if the government agrees to withdraw ongoing legal proceedings and investigations into alleged excessive profits earned by power producers.
Meanwhile, Pakistan’s energy sector reforms continue as the government negotiates with 75 additional power producers—primarily in the solar and wind sectors.
These talks, expected to conclude by April or May, follow agreements with 29 independent power producers that are projected to save the country Rs3.498 trillion in future payments. However, authorities are facing some international resistance in these negotiations.
The government’s latest measures indicate a concerted effort to reduce energy costs, provide consumer relief, and navigate economic challenges while complying with IMF conditions.
