The International Monetary Fund (IMF) has agreed to provide relief to consumers using up to 200-Unit Electricity. Under this agreement, consumers falling within this consumption bracket will be allowed to pay their electricity bills in three monthly installments. However, in return for this concession, the IMF has demanded a 50% increase in gas prices starting from July, as well as a rigorous crackdown on electricity theft.
Sources within the Ministry of Energy have indicated that this agreement between the IMF and Pakistani authorities is subject to approval by the caretaker Prime Minister, Anwarul Haq Kakar, and his cabinet. According to reports, the IMF has conditionally permitted the installment payment of electricity bills for August for consumers who do not qualify for subsidies and consume up to 200-Unit Electricity monthly.
It’s important to note that Lifeline and Protected customers not eligible for this temporary relief since their electricity rates not increased in the previous month. Consequently, only approximately 10% of consumers, which translates to around 4 million individuals, will benefit from this temporary concession.
The government had initially requested the IMF to allow bill installments for consumers consuming up to 400 units of electricity per month, which would have provided relief to 32 million consumers, accounting for 81% of the total. However, this request has not accepted by the IMF. For consumers using up to 100 units, the government had previously increased the per-unit price by Rs 7.28.
Caretaker Energy Minister Muhammad Ali did not respond to requests for comments on the temporary relief. Sources suggest that the IMF has urged Pakistan to simultaneously announce relief for a section of electricity consumers, address electricity theft, and increase gas prices.
The IMF’s call for gas price increases aligns with the decision made by the Oil and Gas Regulatory Authority (OGRA), which has not yet been officially notified. OGRA had announced a 50% hike in prices for Sui Northern Gas Pipeline Limited customers and allowed a 45% increase for Sui Southern Gas Company Limited customers, equivalent to an increase of Rs 417.23 per unit. This decision has made in June, and OGRA has supposed to issue the notification within 45 days. However, the previous government did not implement the gas price hike due to political considerations, leading to a growing debt in the gas sector.
In addition to gas price adjustments, the IMF has also called for the implementation of a weighted average price for gas to ensure consumers charged the full price of imported gas. This involves determining the average price of imported LNG and local gas.
Furthermore, the IMF has demanded a crackdown on electricity theft and the announcement of a plan to recover outstanding dues from defaulters.
These developments reflect the ongoing negotiations between Pakistan and the IMF to address fiscal and economic challenges while aiming to ensure sustainability and efficiency in the energy sector.