The Federal Government has approached the National Electric Power Regulatory Authority (Nepra) for a reduction in electricity rates, after the approval of the International Monetary Fund (IMF).
The Government has proposed a cut of RS1.71 per unit in electricity prices, which would be facilitated through a tariff subsidy. Power’s regulatory authority is scheduled to celebrate an audience on April 4, said Express News on Friday.
The proposed tariff reduction is intended to apply to all distribution companies, including K-Electric, with the subsidy established to enter into force from April to June 2025.
The measure occurs a day after the International Monetary Fund (IMF) said that Pakistan can reduce the prices of electricity in RS1 per unit using income of the RS791 per unit of tax imposed on the gas used internal for the generation of energy by the industries: the only measure that the Government has obtained so far.
This will reduce electricity bills by 1.5%, but industries that use gas to generate internal energy will have to pay additional 23% for gas to achieve this minimum reduction.
The income of the companies of the captive energy plant can be used to reduce the prices of electricity in RS1 by kilowatt, said Mahir Binici, resident representative of the IMF, in a brief statement on Thursday.
Binici made the statement one day after Pakistan and the IMF reached an agreement at the personnel at the end of the first review conversations. Binici declared that price reduction would benefit all consumers. However, the Superior Court of Islamabad has already suspended the gas tax outside the network for at least five weeks.
Pakistan and the IMF have reached an agreement at the personnel level for the section of loans of $ 1 billion, but the time of the meeting of the IMF Board remains uncertain.
The reduction of RS1 per unit suggests that the Government and the FMI anticipate generating around 10 billion to RS120 billion in revenues of the gas tax outside the network.
Prime Minister Shehbaz Sharif has aimed for a long time to reduce electricity prices by at least RS8 to RS8 per unit.
However, Power’s division has not yet presented an acceptable Plan for the IMF that results in a significant price reduction. Pakistan has also been trying to convince the IMF to allow a reduction in electricity prices depending on the additional income of the increase in oil levies, reduced taxes and downward reviews in fuel prices settings and quarterly fees.
The IMF remains not arranged for lower taxes on electricity invoices. Nor has it communicated if it will allow the government to use an additional income of RS180 billion in the recent RS10 walk per liter in the oil tax to reduce electricity prices.
