KARACHI: The Pakistani government on Friday increased the power tariff by Rs1 per unit for major consumers, its finance division said, in a move to unlock the much-needed loan money from the International Monetary Fund (IMF).
An IMF mission left Islamabad on Friday after discussions with Pakistani officials failed to materialize a 9th review of the country’s $7 billion loan program signed in 2019.
Pakistan is desperately looking for a $1.2 billion loan tranche from the IMF to shore up its foreign reserves, which have dropped below $3 billion, and unlock funding from multilateral donors to keep the economy afloat.
On Friday, the Economic Coordination Committee of Prime Minister Shehbaz Sharif’s cabinet has okayed an increase in power tariff among other measures to bring the program, which has been stalled since November, back on track.
“The ECC after discussion approved the proposal to recover Rs76 billion while exempting non-ToU domestic consumers having consumption ≤ 300 units and private agriculture consumers in four months period from March 2023 to June 2023 to recover the markup charges of PHL loans and allowed to impose additional surcharge of Rs1/unit for FY 2023-24 to recover additional markup charges of PHL loans not covered through the already applicable FC surcharge,” the finance division said in a statement.
“The above surcharges will be applicable to K-Electric consumers to maintain uniform tariff across the country.”
Pakistan has for months been grappling with a plethora of economic woes and is looking to quell fears of a default on its international obligations with the release of IMF funds.
The withdrawal of energy sector subsidies has been one of the main conditions of the IMF to resume the stalled loan program. Both Islamabad and the IMF have agreed to virtually resume their talks from next week.
“The ECC considered and approved the proposals contained in another summary of Ministry of Energy (Power Division) regarding recovery of staggered Fuel Charges Adjustment applicable for the months of August and September 2022,” the statement added.
