The government would raise the base power tariff by up to Rs. 7 per unit in a staggered way starting July 1 in the next fiscal year, following the much-delayed increase of Rs. 30 per litre in petroleum product pricing.
According to reliable sources in the Finance and Energy Ministries, the government has assured the International Monetary Fund (IMF) that it will eliminate the Rs. 5 per unit subsidy on electricity bills announced by the previous government on February 28, as well as the four-month price cap on petroleum.
After the budget is announced, electricity costs will be gradually increased over the next four months.
According to sources at the Ministry of Energy, there will be an initial increase of Rs. 3.75 per unit.
The former Pakistan Tehreek-e-Insaf (PTI) government had announced a drop in electricity prices of Rs. 5 per unit that would stop on June 30.
The existing government, on the other hand, is developing a draught summary in accordance with the IMF’s terms for an immediate increase of Rs. 2.17 in the unit cost of power, while a basic price hike of Rs. 0.63 per unit is also outstanding from the previous government’s period. With this increase, an estimated burden of Rs. 350 billion will be passed to power customers.
According to the sources, after the government’s permission, another basic electricity unit cost rise of up to Rs. 0.95 will be passed on to consumers.
As the IMF has questioned the power sector’s ever-growing circular debt, which has amassed to Rs. 2,600 billion, the tariff would be hiked through quarterly adjustments and in the base tariff. When the circular debt of the energy (gas) sector is added to the circular debt of the power sector, the total circular debt exceeds Rs. 4.1 trillion.
the IMF has told Pakistan’s Finance Minister, Miftah Ismail, and the Pakistani delegation that the power sector distribution companies (DISCOs) should be put up for sale as soon as possible through the privatisation process, with the loss-making power DISCOs going to their respective provinces. This will minimise the loss-making DISCOs’ overhead burden and the federal government’s overall liability.
The National Electric Power Regulatory Authority (NEPRA) will help the Office of the Auditor General of Pakistan (AGP) in inspecting state-owned power businesses as part of the power tariff hike and privatization process.
According to the sources, the IMF is urging Pakistan to privatize profit-making efficient power plants in the public sector that run on imported LNG and coal as part of the China-Pakistan Economic Corridor (CPEC) projects.
The PTI government increased base power prices and quarterly increments eight times, resulting in an increase in the cost of electricity of Rs. 9.20 per unit over the previous Pakistan Muslim League-Nawaz (PML-N) government’s tenure.