IMF Approves Re1 Per Unit Reduction in Electricity Tariffs for Consumers

Islamabad – The International Monetary Fund (IMF) has granted approval for a reduction of Re1 per unit in electricity tariffs, a move that will offer significant relief to all electricity consumers across Pakistan. The tariff reduction, as outlined by IMF officials, will be financed through revenue generated from the levy imposed on captive power plants utilizing gas.

This decision follows the successful completion of a staff-level agreement (SLA) between the IMF and Pakistani authorities regarding the first review of the ongoing 37-month bailout program. The agreement, which is awaiting approval from the IMF’s Executive Board, will grant Pakistan access to approximately $1 billion under the Extended Fund Facility (EFF), increasing the total disbursements under the program to nearly $2 billion.

The IMF has emphasized that the tariff reduction is part of broader efforts to alleviate financial pressures on the population while ensuring fiscal stability. This initiative is expected to ease the burden on consumers by approximately Rs100 billion in total. An average household consuming 500 units of electricity per month will see a reduction of Rs500 in their monthly electricity bill under the revised tariff structure.

In addition to the tariff cut, the government is finalizing a broader relief package for electricity consumers, which will be announced following IMF’s approval. Power Minister Awais Leghari had earlier assured the public that the government would follow through on its promise to reduce electricity tariffs, stating that the decision would come “at the right time.” Leghari reiterated that the current administration’s commitments were not like those of previous governments, adding that Prime Minister Shehbaz Sharif would soon announce this “good news.”

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The reduction in electricity prices comes just days after independent power producers (IPPs) offered to cut tariffs by up to Re0.50 per unit and waive over Rs11 billion in late payment surcharges. However, the offer was contingent on the government halting ongoing legal proceedings and investigations into alleged excessive profits by the IPPs.

Furthermore, the government is in the final stages of negotiations with 75 additional power producers, primarily from solar and wind sectors, with plans to conclude talks by April or May. These negotiations are expected to result in savings of Rs3.498 trillion in future payments, despite facing some international resistance.

The government’s continued efforts in addressing the energy sector’s financial challenges aim to provide much-needed relief to consumers and maintain economic stability.