ISLAMABAD: A reduction of Re1 per unit in electricity tariffs has been approved by the International Monetary Fund (IMF), providing relief to all consumers.
As per IMF officials, the tariff relief will be extended to all electricity users and will be financed through revenue generated from the levy imposed on captive power plants using gas.
Concerning the first review of the ongoing 37-month bailout programme, the development follows the staff-level agreement (SLA) reached between the Washington based lender and Pakistani authorities.
The deal, awaiting IMF’s Executive Board’s approval, will see Islamabad securing access to approximately $1 billion under the Extended Fund Facility (EFF), bringing total disbursements under the programme to around $2 billion.
Meanwhile, with regard to the power tariff cut, the lender has clarified that this measure aims to offset financial pressures while maintaining fiscal stability.
Furthermore, the government is also working on a broader relief package for electricity consumers, which will be announced with the IMF’s approval.
Sources say that the reduction in electricity price by Re1 per kilowatt is expected to ease the financial burden on consumers by approximately Rs100 billion in total. An average household consuming 500 units of electricity per month, would see a reduction of Rs500 in their electricity bill under the revised tariff.
IMF’s approval of slashing electricity tariffs comes days after Power Minister Awais Leghari assured of the government’s commitment to slash power tariffs saying that the reduction would happen at the “right time”.
“We stand by our pledge. Our commitments are not like those of the previous government,” the minister had said, adding that Prime Minister Shehbaz Sharif would announce the “good news” soon.
It is pertinent to know that even independent power producers (IPPs) have offered to cut electricity tariffs by up to Re0.50 per unit and waive over Rs11 billion in late payment surcharges — on the condition that the government withdraw all ongoing legal proceedings and investigations into alleged excessive profits.
Meanwhile, the government is also working on finalising negotiations with 75 more power producers — mostly solar and wind — by the end of April or May after concluding talks with 29 IPPs that would save Rs3.498 trillion in future payments, despite facing international resistance in some cases.
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