ISLAMABAD (PEN) : In a bid to ease the financial burden on electricity consumers, the Pakistani government has announced a new relief measure aimed at reducing electricity tariffs for the next three months. The decision was made following the International Monetary Fund’s (IMF) approval for a reduction in electricity rates, allowing consumers to benefit from a drop in charges.
Government’s Relief Initiative
On Friday, the federal government confirmed that it would increase the tariff differential subsidy for electricity consumers from April to June. The government has also submitted a formal request to the National Electric Power Regulatory Authority (Nepra) for approval of this subsidy. Nepra’s review of the application is set to take place on April 4.
As part of the relief package, consumers of distribution companies (Discos) and K-Electric (KE) will see a reduction of Rs1.71 per unit in their electricity bills. However, this reduction will not apply to lifeline consumers.
IMF’s Role in Tariff Reduction
This move is in line with the IMF’s recent approval for a tariff reduction of Rs1 per unit, a decision that benefits all electricity consumers across the country. The IMF had agreed to the cut as part of broader financial measures to support Pakistan’s economy.
The financial relief will be funded through revenue collected from a levy on captive power plants, particularly targeting gas usage within industrial units. This approach is expected to ease the financial pressure on consumers while maintaining financial stability within the energy sector.
Broader Relief Package in the Works
The government is also preparing a more comprehensive relief package for electricity consumers, which will be announced after securing final approval from the IMF. These efforts are part of the government’s broader strategy to manage the country’s energy crisis and provide financial relief to households and businesses.
IMF and Pakistan’s Economic Partnership
On March 26, Pakistan and the IMF reached a staff-level agreement on the first economic review under the Extended Fund Facility (EFF). This agreement unlocked a $1 billion tranche for Pakistan, subject to the IMF’s board approval. Additionally, a new $1.3 billion arrangement was finalized under the Resilience and Sustainability Facility (RSF), bringing the total financial support to $2.3 billion.
In a statement, the IMF acknowledged Pakistan’s progress in stabilizing its economy amid global economic challenges. The IMF praised the country’s improved fiscal discipline, declining inflation rates, and the stabilization of external economic balances. However, the IMF also warned that geopolitical risks, fluctuating commodity prices, and climate-related challenges continue to pose significant risks to Pakistan’s economic recovery.
