IMF turns down Pakistan government’s plan to give relief on electricity bills

The International Monetary Fund (IMF) discontinued the relief package to power consumers using over 200 units, monthly in Pakistan, on September 20. “Circular debt will not come down if relief is given on electricity bills,” said IMF on Pakistan’s relief plan, reported ARY News. 

It is to be noted that the people of Pakistan would only get relief in terms of delayed payments of bills, who are consuming electricity under 200 units for six months continuously. Further, the IMF shared that the aid will be withdrawn if the bill of a consumer crosses 200 units in six months. 

Dip in Pakistan economy, nation struggles with electricity crisis

Earlier, the Caretaker Minister for Energy and Petroleum, Muhammad Ali stressed that the International Monetary Fund (IMF) has not rejected the proposal for the provision of additional subsidies in power tariffs as the government deals with protests against inflated electricity bills.

The electricity sector has been facing troubles despite quarterly tariff adjustments' (QTA) mandate to raise rates by (PKR) 5 per unit in the current month and FPAs by (PKR) 2.72 per unit, as per sources. In all, a rate increase of more than (PKR) 7 per unit has been planned. The QTAs would be estimated using losses from the April-June period as a result of lower unit consumption, cost escalation of interest payments, and exchange rate movements, reported Geo News. 

Amid the Pakistan economy tensions, the country has increased the electricity base rate by Pakistani Rupees (PKR) 7.5 per unit in July. The National Electric Power Regulatory Authority (NEPRA) has permitted the federal government an increase of PKR 4.96/unit in base electricity tariff, on July 14.  

Moreover, Pakistan's caretaker government has already been seeking the power regulator to start charging another PKR 5.40 per unit quarterly tariff adjustment over six winter months starting in October instead of permissible in three months, as per the Dawn report. The main cause behind the current power tariff is current depreciation, which has accounted for almost 70 per cent. This has left the government with no other option but to consider the IMF programme. Further, a 10-12 per cent hike has been witnessed because of the interest rates and the government and the SBP's hands are tied under the fund programme.