Electricity bills are likely to go higher in the coming cycles as the International Monetary Fund (IMF) has urged Pakistan to collect over Rs. 700 billion from power consumers.
The lender has instructed an across-the-board increase in electricity tariffs of up to Rs. 7.50 per unit in order to recover over Rs. 700 billion from consumers after the government failed to meet previous commitments, reported a national daily.
For the previous fiscal year, an increase of Rs 7.91 per unit was agreed upon with the IMF and World Bank, but it was only partially implemented until July 1, 2022. The IMF was also assured that any related or pending adjustments would be passed on to consumers on time, but their rollout was postponed.
The IMF was assured that recovery would be 93.83 percent, but it remained less than the agreed target. Transmission and distribution losses exceeded 17 percent compared to the IMF and World Bank commitment of 15.83 percent. Pertinently, electricity demand remained low at 44 billion units despite the IMF’s understanding of 45 billion units during the first quarter of the fiscal year 2022-23, said the report.
The IMF was also assured that the exchange rate for the previous fiscal year would be Rs. 194 per US dollar, but it remained above Rs. 200. Similarly, the lender had been told that KIBOR would be 10.5 percent but it remained at 15 percent.
Moreover, despite the IMF saying unequivocally that it will not allow any subsidies other than those aimed at the poorest segments of society, the government approved additional power sector subsidies totaling more than Rs. 200 billion, while it also staggered the Fuel Cost Adjustment (FCA) in violation of IMF and World Bank commitments.
Understandably, the Power Division has proposed to the government that the NEPRA Act be amended to impose a surcharge of over Rs. 700 billion in addition to the existing Rs. 0.43 per unit to cover the funding gap, a move that would convince the IMF to release the remainder of its bailout package to Pakistan.
Instead of charging 7.5 rupees from every customer why don’t apply the increase to only 3 phase consumers with consumption more than 500 units. Average people already suffering the bad governance effects.