IMF rejects Pakistan government’s plan to provide relief on electricity bills

The International Monetary Fund (IMF) suspended the relief package for energy consumers using more than 200 units per month in Pakistan on September 20. “Circular debt will not decrease if relief is granted on electricity bills,” the IMF said of Pakistan’s aid plan. ARY News reported.

It may be noted that the people of Pakistan would only get relief in terms of delays in payment of bills as they consume less than 200 units of electricity for six months at a stretch. Additionally, the IMF shared that aid will be withdrawn if a consumer’s bill exceeds 200 units in six months.

Pakistan economy slump, nation struggles with power crisis

Earlier, Acting Minister of Energy and Petroleum Muhammad Ali stressed that the International Monetary Fund (IMF) has not rejected the proposal to grant additional subsidies on electricity tariffs, as the government faces protests against inflated electricity bills. .

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

Amid Pakistan’s economic tensions, the country increased the base electricity tariff by Pakistani rupees (PKR) 7.5 per unit in July. The National Electric Power Regulatory Authority (NEPRA) allowed the federal government an increase of PKR 4.96/unit in the base electricity tariff, on July 14.

Furthermore, Pakistan’s caretaker government has already been seeking the power regulator to start charging another PKR 5.40 per unit of quarterly tariff adjustment for six winter months starting October, instead of what is allowed in three months, according to the Dawn report. The main cause behind the current electricity rate is the current depreciation, which has represented almost 70 percent. This has left the government with no option but to consider the IMF programme. Also, an increase of 10-12 per cent has been seen as interest rates and the government and SBP’s hands are tied under the fund programme.