Pakistan's Premier Multilingual News Agency

Nepra approves Rs 5.72 per unit increase in base tariff

Islamabad, 4 July 2024, (GNP): The federal cabinet has taken a significant step to comply with a major condition set by the International Monetary Fund (IMF) by approving an increase in electricity tariffs. Sources from The News revealed that the decision to raise the basic electricity tariff was formally endorsed through a circulated summary.

National Electric Power Regulatory Authority (Nepra) initiated the proposal, urging the federal government to approve an average hike of Rs5.72 per unit in the basic electricity tariff. This move underscores the government’s commitment to meet IMF obligations and address fiscal challenges, reflecting a strategic policy adjustment in the current economic landscape.

According to government sources, the federal cabinet’s decision will be forwarded to Nepra to establish a uniform tariff. Upon Nepra’s approval, the federal government will issue a notification to increase the basic electricity tariff by July 10, as mandated by IMF conditions. The proposed hike, as per Nepra’s decision, is expected to impose an additional burden of approximately Rs600 billion on electricity consumers.

Nepra has approved an average increase in the basic electricity tariff for the fiscal year 2024-25, set to take effect from July 1, 2024, raising it from the current Rs29.78 to Rs35.50 per unit.

In the last fiscal year 2023-24, the federal government increased the basic electricity tariff in a single lump sum, whereas in the fiscal year 2022-23, the tariff increase was implemented in three phases.

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In the ongoing negotiations with the IMF, Pakistan is navigating significant economic challenges as it seeks to stabilize its finances and meet stringent conditions for the bailout. The government’s decision to set ambitious revenue targets and reduce the fiscal deficit underscores its commitment to fiscal discipline amid rising domestic concerns over new taxation measures.

The proposed increase in the basic electricity tariff reflects Pakistan’s efforts to address fiscal imbalances and meet IMF stipulations, despite potential backlash from consumers. The phased and lump-sum approaches in tariff adjustments in recent years highlight the government’s strategy in managing economic reforms amidst varying fiscal pressures.

These measures are pivotal as Pakistan aims to secure financial support from international lenders to bolster its economy and mitigate risks of economic instability. The outcome of the negotiations with the IMF will likely have profound implications for Pakistan’s economic trajectory in the coming years.