Pakistan to Raise Power Prices in Key Move to Secure IMF Loan

By Bloomberg

Jun 16, 2024

image is BloomburgMedia_SF5IXUT1UM0W00_16-06-2024_12-00-12_638540928000000000.jpg

High voltage power lines in Karachi, Pakistan, on Wednesday, June 8, 2022. Pakistan is bearing the brunt of a global energy crunch prompted by rebounding post-pandemic demand and a squeeze on fuel supply as many nations shun Russian fuel exports because of the country’s war in Ukraine. Photographer: Asim Hafeez/Bloomberg

(Bloomberg) -- Pakistan is raising power prices by an average 20% to bolster its chances of securing a new loan from the International Monetary Fund.

The National Electric Power Regulatory Authority will increase the power tariff by an average 5.72 rupees to 35.50 rupees per kilowatt-hour for Pakistan’s 10 power distribution companies for the next fiscal year starting from July 1, authority spokesman Sajid Akram said by phone on Saturday.

Pakistan cut power tariffs for industries on Friday to help make exports competitive. Prime Minister Shehbaz Sharif’s government raised taxes in its budget last week to boost revenue as it engages in talks with the IMF for more emergency funding.

The nation expects to secure a staff-level deal for a program that will last minimum three years by July, according to Finance Minister Muhammad Aurangzeb.

“The power tariff hike is critical for securing the IMF program as it is a key part of stalling the ongoing rise in debt across the energy sector,” said Uzair Younus, a principal at The Asia Group’s South Asia Practice.

The arrangement is part of a multiyear tariff regime, and any change will be applicable after the regulator decides on the government’s requests for a uniformed tariff for the state-owned power distribution companies and K-Electric.

By Kamran Haider , Faseeh Mangi