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Print Print 2025-03-28

IMF allows govt to cut power tariff

  • Relief to be financed through revenue collected from levy imposed on captive power plants
Published March 28, 2025

ISLAMABAD: International Monetary Fund (IMF) has allowed the government to reduce electricity tariff by Re1 per kilowatt-hour for all consumers in Pakistan. This relief will be financed through revenue collected from levy imposed on captive power plants (CPPs).

This was stated by Mahir Binici, IMF Resident Representative in Pakistan while talking to media here on Thursday, following the staff level agreement (SLA) on the first review of the $7 billion Extended Fund Facility (EFF) programm, and on a new arrangement of $1.3 billion under the Resilience and Sustainability Facility (RSF).

Binici said that the EFF programme already allows some explicit subsidies in the form of Tariff Differential Subsidy (TDS) and revenue from levies on CPPs firms. This should directly add to the existing subsidy and then could reduce power tariffs in near term by around one rupee per kilowatt-hour. This relief would be applicable to all consumers across the country, he added.

Contingent on IMF nod: Power tariff may be cut by up to Rs8/unit

Sources revealed that the government is in the process of finalizing a relief package for electricity consumers by Rs 8-10 per unit. However, the implementation of this package is subject to IMF approval. Sources revealed that the package has been shared with the Fund, however a decision is awaited.

The Fund in its statement issued after the SLA agreement noted that the Pakistani authorities’ timely implementation of electricity and gas tariff adjustments, along with the early impact of reforms, has helped reduce the stock and flow of the sector’s circular debt, and both should remain a priority.

It is necessary to accelerate cost-side reforms, including improving distribution efficiencies, integrating captive power into the electricity grid, enhancing the transmission system, privatizing inefficient generation companies, and expanding renewable energy adoption.

Copyright Business Recorder, 2025

Comments

200 characters
Aamir Mar 28, 2025 08:49am
Rs 1 per kilowatt. Is this a joke? Who will announce this to the public and get rediculed
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Akbar Shaheryar Mar 28, 2025 10:00am
Glad to see some relief, but I just hope it actually makes a difference for consumers and isn’t just a temporary adjustment. The real issue is fixing the power sector’s inefficiencies in the long run
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Mubasal Mar 28, 2025 10:18am
IMF's approval of a Rs1/kWh reduction is a small relief amid exorbitant electricity costs. The real challenge remains implementing comprehensive reforms while providing relief to struggling consumers.
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KU Mar 28, 2025 11:29am
It's like Pakistan begging for economic n it's people's survival. Yet no one dare ask why are we in this position; one sneeze n we default.
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Az_Iz Mar 28, 2025 05:10pm
Govt should increase petroleum levy by another Rs 60,and use that Rs1 trillion additional revenue,to significantly reduce electricity prices for all.Petroleum prices would still be same as in India.
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Abdullah Mar 28, 2025 07:02pm
@Az_Iz, true.its time the levy is increased to cover shortfall.
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