IMF rejects Pakistan’s tariff adjustment plan amid inflation woes

As Pakistan Continued to face economic challenges, the International Monetary Fund has made it difficult for the country to run by rejecting the proposal for any tariff adjustment or additional subsidy provision, Geo News reported.

This occurred despite claims by authorities that August bill collections were close to expectations.

In response to the IMF’s strong objections to the government’s proposal to provide relief to the poor against inflated energy bills, Pakistan has requested that the upcoming Quarterly Tariff Adjustments (QTA) and Fuel Price Adjustments (FPA) of ( PKR) 7.50 per unit are staggered. the next four to six months, Geo News reported, citing The News International’s report.

“However, Pakistan has asked the IMF for the staging of QTA and FPA over a period of four to six months, so it may also require some additional cost on which both parties will have to agree,” senior official sources confirmed while speaking with The News. .

According to sources, power sector problems have persisted despite QTA’s mandate to increase rates by (PKR) 5 per unit in the current month and FPAs by (PKR) 2.72 per unit. In total, a rate increase of more than PKR 7 per unit is planned. QTAs will be calculated using losses for the April-June period as a result of lower unit consumption, higher interest payment costs and exchange rate movements, Geo News reported, citing The News.

In early July, amid the country’s economic crisis, Pakistan increased the base rate for electricity in Pakistani rupees (PKR) by 7.5 per unit.

On July 14, the National Electric Power Regulatory Authority (NEPRA) allowed the federal government an increase of PKR 4.96 per unit in the base electricity tariff, according to ARY News.

In addition, Pakistan’s interim government has already requested the power regulator to start charging another PKR 5.40 per quarterly tariff adjustment unit for six winter months from October, instead of the allowed three months, Dawn reported. .

The main reason behind the current electricity tariff is the current depreciation, which is almost 70 percent and the government had no option at its disposal at this time to control it, considering the IMF program. Also, a 10-12 percent increase is due to interest rates and the government and SBP are tied hands under the fund program.