The International Monetary Fund (IMF) has approved a Re1 per unit reduction in electricity tariffs, providing relief to consumers struggling with rising inflation. The relief will be funded through a gas levy on captive power plants, ensuring financial stability while easing the burden on households.
Tariff Relief Plan
This electricity tariff reduction applies to all consumers across Pakistan. According to IMF officials, the funding for this relief will come from the levy imposed on captive power plants that run on gas. This measure is part of broader economic reforms under Pakistan’s ongoing 37-month bailout program.
The approval follows the recent staff-level agreement between the IMF and the Pakistani government. Once the IMF’s Executive Board gives its final nod, Pakistan will receive $1 billion under the Extended Fund Facility (EFF), increasing total disbursements to $2 billion.
Read: IMF Approves Rs 1 Per Unit Reduction in Electricity Tariff
Impact on Consumers
The tariff cut is expected to reduce electricity costs by nearly Rs100 billion. A household consuming 500 units per month will save around Rs500 on its electricity bill under the revised pricing. The move aims to ease financial pressure on consumers while maintaining fiscal discipline.
Government’s Commitment to Lower Tariffs
Power Minister Awais Leghari recently assured the public that the government is committed to lowering electricity tariffs at the right time.
Additionally, the government is working on a broader relief package for electricity consumers. However, this plan will be formally announced only after securing IMF approval.
Independent Power Producers’ Role
Independent power producers (IPPs) have also stepped forward with an offer to reduce tariffs by up to Re0.50 per unit. They have agreed to waive Rs11 billion in late payment surcharges. However, this offer is contingent on the government withdrawing all ongoing legal proceedings and investigations into alleged excessive profits earned by these producers.
Negotiations with Renewable Energy Producers
The government is also negotiating with 75 power producers, mainly in the solar and wind energy sectors, to finalize agreements by April or May. Despite facing resistance from international stakeholders, Pakistan aims to push forward with these negotiations to secure long-term energy cost reductions.
A Step Toward Economic Stability
The electricity tariff reduction is a significant step in Pakistan’s economic recovery efforts. By easing financial pressure on consumers and ensuring fiscal balance, the government hopes to stabilize the power sector while maintaining IMF-backed reforms.
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