Prime Minister Shehbaz Sharif on Monday talked of his government's compulsion under the International Monetary Fund's (IMF) deal aimed at reducing unsustainable public debt in the power and gas sector.
Pakistan's cabinet on Friday approved the power regulator’s request to up the national average tariff.
The National Electric Power Regulatory Authority (Nepra) will implement the hike, which will retrospectively take effect from July 1 and apply to all power distribution companies (Discos).
Earlier in July, the government increased the average power tariff by 4.96 Pakistani rupees per unit for the current fiscal year (2023-24).
The PM also said that price hikes as high as 5.75 Pakistani rupees ($0.020) a unit would not impact all citizens. Consumers of up to 200 units - 63% of the total - would be exempt from the tariff increase, and another 31% would qualify for a partial subsidy.
According to media reports, debts to power generation companies have accumulated to nearly 2.6 trillion Pakistani rupees ($9.04 billion), and a separate government debt of around 1.6 trillion rupee ($5.56 billion) to the gas sector.
“Due to the toughest conditions from the International Monetary Fund, the government had to raise the electricity prices but I stressed that the burden should not be passed on to the protected segments of the society,” Sharif said in an event in Islamabad.
Earlier this month, the IMF board approved a $3-billion bailout for the cash-strapped country with certain conditions, including a power tariff hike, and an interest rate increase.
The IMF asked Pakistan to gradually decrease subsidies for the power sector, and expenses related to salaries and pension.