Govt to Seek IMF Approval for Electricity Tariff Rebasing Plan

Govt to Seek IMF Approval for Electricity Tariff Rebasing Plan

ISLAMABAD: The government of Pakistan has decided to formally notify the International Monetary Fund (IMF) about its plan to rebase electricity tariffs, aiming to secure the lender's consent and alleviate the financial burden on consumers while preventing potential public unrest.

While the rebasing plan had previously been shared informally with the IMF, the government now intends to officially communicate the proposal to align it with international commitments. The move seeks to mitigate the impact of high electricity costs, which have sparked public dissatisfaction and protests in the past.

To facilitate this adjustment, the government has issued policy guidelines to the National Electric Power Regulatory Authority (Nepra), proposing a shift in the tariff rebasing timeline. Under the revised plan, tariff adjustments would take effect on January 1 each year instead of July 1, avoiding peak summer months when electricity demand and costs are at their highest. By aligning the adjustments with the lower consumption period in winter, the government aims to reduce financial pressure on consumers and ensure more predictable electricity pricing throughout the year.

Nepra, in principle, has expressed support for the proposal, while the Power Division has pledged its cooperation to implement the change. The rebasing timeline adjustment will require amendments to the legal and regulatory framework to ensure timely completion of regulatory proceedings.

Currently, under Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, and Rule 17 of the Nepra (Tariff Standards and Procedure) Rules, 1998, Nepra determines the end-consumer tariffs for ex-Wapda distribution companies (DISCOs) and K-Electric. The existing process begins on July 1, during peak summer months, causing affordability challenges and heightened costs for consumers.

The proposed January timeline will involve DISCOs submitting their requirements by January 31 each year to initiate the tariff determination process. This includes internal meetings, public hearings, and government notifications. By adjusting the timeline, the government aims to ease financial strain on consumers and address longstanding public concerns over electricity costs.

The Finance Division highlighted that the implications of this adjustment had been discussed during recent meetings with the IMF and recommended formal notification to secure the lender’s approval. The federal government last notified a uniform tariff on July 14, 2024.