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Tariff Of Electricity Will Increases Up To 7.50 Per Unit, Condition’s Of IMF

ISLAMABAD: International Monetary Fund (IMF) has reportedly sought an increase in electricity tariff up to 7.50 rupees per unit across the board, to recover over Rs 700 billion from consumers as previous commitments made by the government were not met,

An increase of Rs 7.91 per unit was agreed with the Fund and World Bank for last fiscal year but it was only partially implemented till July 1, 2022. IMF had also been assured that FPA and QTAs will be passed on to the consumers on time but their implementation had been delayed.

The sources said, IMF had been assured that recovery will be 93.83 percent, but in fact it remained less than 90 percent (FY-22 at 90.43 percent). Transmission and Distribution losses were greater than 17 percent (FY-22 at 22.16 percent) against the commitment of 15.83 percent, made with the IMF and World Bank.

Electricity demand remained depressed at 44 billion units during first quarter of current fiscal year (FY-22 at 44.4 percent) whereas IMF had been given the understanding of 45 billion units.

According to sources, government has extended subsidy of Rs 281 billion to K-Electric despite the fact that it was not budgeted.

IMF had also been given assurance that exchange rate for last fiscal year would be Rs 194/$ which remained at over Rs 200/$. Likewise, the Fund had been given words that KIBOR would be 10.5 percent while in fact it remained at 15 percent.

While Also National Electric Power Regulatory Authority (Nepra) has approved negative adjustment of Rs 7.43 per unit in KE’s tariff and Rs 0.19 per unit positive adjustment in Discos tariffs for the month of November 2022 under monthly Fuel Charges Adjustment (FCA) mechanism.

The authority conducted a public hearing on December 27, 2022, wherein different issues were raised by the representatives of business community and public respectively.

According to separate determinations and notifications issued by the regulator, the KE had sought negative adjustment of Rs 7.04 per unit in FCA of November.

The government has also approved additional subsidies to the power sector of over Rs 200 billion despite the fact that IMF has clearly indicated that it would not allow any subsidy except those targeted to the poor segment of society.

The sources said the government staggered Fuel Cost Adjustment (FCA) in violation of commitments with the Fund and World Bank.

The sources said power sector budgeted requirement was of Rs 1.734 trillion whereas the government budgeted only Rs 570 billion.

Power Division has reportedly proposed to the government to amend NEPRA Act to impose surcharge to cover the gap of over 700 billion, in addition to existing Re 0.43 per unit