IMF allows govt to cut power tariff

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