The government on Tuesday appeared set to increase the electricity tariff it had put on hold in April as part of revised Circular Debt Management Plan (CDMP) and efforts to ensure continuous foreign inflows from lending agencies – particularly the IMF, the World Bank and the Asian Development Bank.
The tariff increases would be made through quarterly adjustments and surcharges in a phased manner.
As per a report by Dawn, the tariff increase along with CDMP is expected to set into motion from Oct 1, but has to be discussed in detail by the Economic Coordination Committee (ECC) of the Cabinet within a few days.
According to the report that quoted an official privy to the matter, it was important that when Finance Minister Shaukat Tarin visits Washington early next month for Oct 11-17 World Bank-IMF annual meetings, the Ministry of Finance and IMF staff are on the same page regarding the revival of $6bn IMF programme currently in recess.
The official said the World Bank executive board would separately be meeting in the last week of this month to approve three different programme loans, particularly the $400 million energy sector loan.
He said various scenarios were discussed including the full revival of tariff increase plan committed with the IMF and the subsequent challenges arising out of increasing size of fuel cost adjustments (FCA), partly because of record high LNG prices, on a monthly basis.
“Definitely the consumers are in double jeopardy in the shape of base tariff increase when FCAs are ranging between Rs1 to Rs1.50 per month,” the official conceded, adding the government has so far been advocating 18-20pc increase in industrial electricity consumption because of cheaper rates on incremental consumption as a success story to address power surplus challenge but “you have to take a decision at some point”.
The finance minister has stressed upon “exploring cost-effective options such as renewable sources of energy for a sustainable energy equation by reducing reliance on expensive power producing plants in order to make the energy sector dynamic and sustainable”.
The Power Division had estimated the average consumer tariff to increase from about Rs16 per unit to Rs20.50 by July 2022.
