Govt to Increase Electricity Price by Rs. 7

The government will raise the base electricity tariff by up to Rs. 7 per unit in a phased manner beginning July 1 after the much-delayed increase of Rs. 30 per liter in petroleum product prices.

According to reliable sources in the Ministries of Finance and Energy, the government has assured the International Monetary Fund (IMF) that it will eliminate the Rs. 5 per unit subsidy announced by the previous government on February 28 and the four-month price cap on petroleum.

After the budget is announced, electricity prices will gradually increase over the next four months. According to sources in 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 reduction in electricity prices of Rs. 5 per unit that would end on June 30.

On the other hand, the incumbent government is preparing a draught summary in accordance with the IMF’s conditions for an immediate increase of Rs. 2.17 in the unit cost of electricity, while a basic tariff increase of Rs. 0.63 per unit is also pending from the previous government’s tenure.

With this increase, an estimated burden of Rs. 350 billion will be shifted to power consumers.
According to the sources, after the government’s approval, another essential electricity unit cost increased by Rs. 0.95 will be passed on to consumers.

As the IMF has questioned the power sector’s ever-growing circular debt, which has accumulated to Rs. 2,600 billion, the tariff will be increased through quarterly adjustments and in the base tariff. When the circular debt of the energy (gas) sector is added to the power sector’s circular debt, the total circular debt exceeds Rs. 4.1 trillion.

According to sources, 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 privatization process, and the loss-making power DISCOs should be given to their respective provinces. This will reduce the loss-making DISCOs’ overhead burden and the federal government’s overall liabilities.

The National Electric Power Regulatory Authority (NEPRA) will assist the Office of the Auditor General of Pakistan (AGP) in auditing state-owned power companies as part of the power tariff increase and privatization process.

According to the sources, the IMF is pressuring 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 electricity tariffs 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.

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