Pakistan to Throw Another Electricity Prices Bomb to Meet IMF ConditionsPakistan’s power regulator has increased the electricity tariff by Rs4.96 per unit for thecurrent fiscal year (FY24), in compliance with the conditions set by the InternationalMonetary Fund (IMF).
The National Electric Power Regulatory Authority (NEPRA) of Pakistan calculates
separate consumer-end tariffs for each of the country’s power distribution companies.
These companies have different revenue requirements and are authorized to have
varying levels of transmission and distribution losses.
Once determined, NEPRA submits the tariffs to the federal government for the inclusion
of subsidies or surcharges, after which a uniform application of the tariff is filed for
consumer billing.
“The revised National Average tariff for FY 2023-24 has been determined to be
Rs.29.78/kWh, which is Rs.4.96/kWh higher than the previously established national
average tariff of Rs. 24.82/kWh,” according to a NEPRA statement.
“The Rs.4.96/kWh hike is mainly attributed to overall low sales growth, rupee
devaluation, high inflation, exorbitant interest rates, and the addition of new capacities.”
This development comes after the IMF approved a $3 billion bailout package for
Pakistan last month to rescue the cash-strapped South Asian nation from the brink of
default.
To release the funds, the lender imposed a set of conditions on Pakistan, including an
increase in electricity prices due to the unsustainable nature of the country’s electricity
economics, with circular debt soaring to Rs2.6 trillion.
NEPRA stated that the total revenue requirement of Pakistan’s power distribution
companies was projected to be Rs3,281 billion and that projected sales for FY 2023-24
were anticipated to be 110,165 GWh.
“Any relief from a decrease in tariff will be directly passed on to consumers in the future,
in the event of an appreciation of PKR, a decrease in inflation and interest rates, among
other factors,” the regulator added.