The government’s plan for a reduction in electricity tariffs has encountered a setback due to the International Monetary Fund (IMF), which is currently withholding a staff-level agreement (SLA) on Pakistan’s first biannual review of the $7 billion Extended Fund Facility (EFF), Dawn reported.Â
It was reported that the prime minister would announce a reduction of Rs8 per unit in electricity rates during his March 23 speech. However, no such announcement was made, as the PM instead presided over a meeting addressing the issue within the power sector.
On March 15, the PM’s office indicated that the government would maintain petroleum prices at their current levels despite an expected cut of Rs13 per liter, transferring the savings to electricity consumers. The government had also prepared a relief package using savings from international oil price changes.
However, the proposed tariff reduction faced scrutiny from the IMF, which is currently reviewing Pakistan’s economic performance for the first six months of the fiscal year and its outlook for the remainder of 2025.Â
According to officials familiar with the matter, the IMF did not approve the proposed figures during their review meetings, further delaying any announcement.
While a tariff cut of Rs2 per unit was discussed during talks with the IMF, the government had also considered increasing the petroleum levy to offset the revenue loss. Although this would have been revenue-neutral, the IMF requires a thorough review of the overall fiscal impact before agreeing to the plan.
Additionally, the National Electric Power Regulatory Authority (Nepra) is reviewing petitions from power distribution companies (Discos) regarding annual tariff adjustments, further complicating the situation.
Sources suggest that while the government’s plans face procedural and regulatory challenges, a reduced tariff of approximately Rs5 per unit may still be achievable once it is supported with sufficient data.
