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Government aims to generate Rs721 billion through an increase in power tariff.

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Informants indicate that they have communicated the plans for electricity power tariff to the IMF.

ISLAMABAD: The national government has devised a plan to gather an extra Rs721 billion from electricity users in the ongoing fiscal year, in accordance with the terms established in agreement with the International Monetary Fund (IMF).

Government’s Strategy Shared with IMF to Raise Electricity Tariff and Decrease Circular Debt

As per information from sources within the finance ministry, the government has disclosed its strategy to the IMF. Further, The strategy centers on increasing the electricity power tariff and addressing the circular debt problem within the power sector.

According to these sources, there is a plan to incrementally raise the electricity rate by Rs1.25 per unit until September. They will implement this adjustment quarterly within the electricity tariff structure, with a projected potential of yielding around Rs39 billion in additional revenue.

Incremental Electricity Tariff Adjustments Planned to Reduce Circular Debt

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In the upcoming September-December quarter. Further, There is a projected increase in electricity costs by Rs4.37 per unit, primarily attributed to fuel adjustments. Anticipatedly, this adjustment will add an extra Rs122 billion in revenue by the conclusion of 2023.

Moreover, the annual increase of Rs5.75 paise in electricity prices. Anticipated as part of the rebasing process, this is expected to generate a substantial amount of Rs560 billion.

This injection of funds aims to mitigate the burden of circular debt within the power sector.

These strategies collectively foresee a reduction in the circular debt impacting the power sector, with the observed Rs2,700 billion from the preceding fiscal year expected to decrease to an estimated value of Rs2,130 billion by the conclusion of the current financial year in June 2024.

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