Islamabad, March 28: The federal government has formally requested the National Electric Power Regulatory Authority (Nepra) to reduce electricity prices by Rs1.71 per unit nationwide, including Karachi. However, this reduction is significantly lower than the Rs8 per unit relief that was initially speculated.
Despite earlier reports suggesting a major cut in electricity tariffs, the International Monetary Fund (IMF) reportedly blocked a larger reduction during its staff-level review of the $7 billion Extended Fund Facility (EFF).
The IMF only permitted a Re1 per unit reduction related to grid levies imposed on industrial captive power plants.
During the March 4-14 negotiations, Pakistani authorities proposed a Rs2 per unit tariff reduction by renegotiating contracts with independent power producers (IPPs). However, this was not fully endorsed by the IMF.
Alternative Strategies Considered
In an attempt to fund a greater reduction in electricity costs, the government considered:
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Increasing the petroleum levy on petrol and diesel by Rs10 per litre (to a maximum of Rs70) under the Finance Act 2025.
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Redirecting additional revenues from fuel levies to lower power tariffs by Rs2-2.50 per unit.
Despite this, the official government petition to Nepra only proposes a Rs1.71 per unit reduction through increased tariff subsidies.
Nepra’s Next Steps
Nepra will review the petition on April 4, 2025, covering all power distribution companies (Discos), including K-Electric. The proposed changes would apply from April to June 2025.
Meanwhile, Nepra is also reviewing annual base tariff revisions from Discos. So far, only seven IPPs have sought revised tariffs after negotiations with a civil-military task force.
Other IMF Restrictions
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The IMF rejected a proposal to reduce real estate tax rates.
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However, a 2% federal excise duty on first-time property transactions may be lowered in the upcoming budget.
This development highlights the IMF’s stringent oversight over Pakistan’s economic policies, limiting the government’s ability to provide major electricity price relief.
