Power tariff hiked on IMF’s demand, was necessary to control circular debt: PM Shehbaz
Lahore
Prime Minister Shehbaz Sharif on Saturday reiterated that the recent rise in the base power tariff of around Rs5 per unit was made on the demand of the International Monetary Fund (IMF) but also to bring the circular deficit.
A day ago, the power regulator raised the tariff to ensure Rs3.28 trillion in funds to the loss-making power distribution companies (Discos) during the current fiscal year. The Rs4.96 hike, set to come into force from July 1 after formal notification by the government, would provide Rs477 billion in additional revenue to Discos.
The revised national average tariff for the 2023-24 fiscal year has been determined at Rs29.78 per unit (kilowatt-hour, or kWh), which is Rs.4.96 per unit higher than the previously determined national average tariff of Rs24.82, the National Electric Power Regulatory Authority (Nepra) said in a statement.
An official said the real applicable average national tariff would now stand between Rs50 and 56 per unit after including surcharges, taxes, duties and levies, besides monthly and quarterly adjustments.
This was one of the key requirements of the $3bn standby arrangement signed with the IMF to ensure “further progress on structural reforms, particularly with regard to energy sector viability and state-owned-enterprise governance”.
The hike was slammed by the business community which said it will not only push up the cost of doing business but dent local production and render Pakistani goods uncompetitive on the world markets.
Addressing a meeting with office-bearers of the Lahore Chamber of Commerce and Industry (LCCI) and renowned businessmen and industrialists here at Punjab Governor’s House, the prime minister provided the rationale for the price hike.
“We have to, unfortunately, do this increase in the electricity prices because not only is it an IMF demand but where is the circular deficit going?”
The premier acknowledged that there were line losses and transmission losses but also pointed out the issue of electricity theft.
