Government Seeks to Increase Power Tariffs to Salvage IMF Deal

Pakistan's Power Division has announced that power tariffs will increase dramatically over the next five months. To reduce the circular debt, the government plans to increase the power tariff by Rs 6.79 per unit in a series of stepwise increases.

In connection with the ninth review of the $7 billion Extended Fund Facility (EFF), the Power Division briefed the International Monetary Fund (IMF) team about the plan. In order to facilitate the release of a $1 billion tranche under the EFF, the IMF has been urging the Pakistani authorities to take all necessary steps.

Power tariffs are expected to increase for the first time this month, by up to Rs 4.46 per unit, under the quarterly adjustment process. Following an increase of Rs 3.21 per unit in February, a hike of Rs .69 per unit will occur in March, followed by a hike of Rs 1.64 per unit in June.

A list of prerequisite actions has been shared with Pakistani authorities in order for the stalled Fund program to be revived. There is no doubt that these changes to the power tariffs will have a significant impact on the country and its citizens, but how they will be received by the public remains to be seen