Prime Minister Shehbaz Sharif on Tuesday said the government plans to delay raising power tariffs until October, offering respite on power rates, a key component in the country’s agreement with the International Monetary Fund (IMF).
Reining in unresolved debt across Pakistan’s power sector is a top concern of the IMF, with which Islamabad plans to sign a deal this month. Poor and middle-class households are still feeling the impact of the IMF’s bailout of Pakistan last year, which involved a series of power tariff hikes over 12 months as part of the IMF programme which ended in April.
“We are giving this respite for three months: July, August and September,” the prime minister told a news conference, with a view to cooling temperatures in October when electricity consumption falls.
He said the decision to delay the raising of power tariffs would benefit 94% of domestic households as the country of 300 million people face summer temperatures surging to a near record. He added that Pakistan has no choice but to enter a new IMF programme and that Islamabad wants to sign a three-year deal.
“The government will give a discount of Rs50 billion to the electricity lifeline consumers in July, August and September. For three months, 25 million consumers of the country will benefit from the government’s relief,” read a post shared on state broadcaster PTV News’ official account on social media platform X.
It continued that the development would benefit “94% of the country’s domestic consumers” of electricity. The premier said the move would provide relief of up to Rs7 per unit to around 25 million domestic lifeline consumers for three months till September.
“Today, an amount of Rs50 billion has been allocated to provide a relief of Rs4-7 per unit as a concession to our protected category consumers using up to 200 units a month for a three-month period from July to September,” he explained.
“This will benefit around 25 million domestic power consumers who form around 94% of the total consumer base.”
He added that the consumers of K-Electric would also benefit from this relief.
PM Shehbaz elaborated that the amount of Rs50 billion would be used from the development funds reserved in the budget to keep its commitment to public relief against the “hollow claims” of previous governments.
The premier noted that the three summer months – July to September – were the hardest to cope with, but from October onwards, as the weather cools down, the electricity consumption was likely to reduce.
PM Shehbaz assured the people of further relief as the government achieved fiscal space following its ongoing measures of taxing the elite class, broadening the tax net, shutting down non-performing entities and plugging financial leakages.
The premier noted that the country had no choice but to enter a new International Monetary Fund (IMF) programme and that the government wanted to sign a three-year deal.
He added that the government had taken the lender on board about the relief announced for the domestic power consumers.
PM Shehbaz highlighted that during its previous 16-month tenure, the coalition government had saved the country from default by putting its politics at stake.
He said the federal and Balochistan governments had reached an agreement a day earlier to solarise around 28,000 tube wells in the province to save around Rs80-90 billion every year as the consumers were defaulting payment on their power bills.
The premier continued that the same model would be launched in other provinces as around a million tube wells were being run on imported oil having a financial implication of $3.5 billion on foreign exchange.
He added that a business model was being prepared for this purpose.
The prime minister further noted that new taxes were imposed on the real estate sector in the annual budget to generate around Rs100 billion.
He acknowledged that the salaried class was justified to protest against the tax burden.
“The time has come for the elite class to pay back to the country. These are the challenges and parasites which are eating up the country. If we have to make the country prosper, we will have to get rid of loans and begging. The only way is to make efforts and make the elite class pay back to the country.”
The premier also called for utilising the immense potential in the country’s agricultural, information technology, mining and mineral sectors.
In the wake of the people’s uproar and the opposition taking advantage of the situation, the federal government decided to roll back the 51% hike in electricity rates for consumers using up to 200 units it had approved last week to comply with the condition set by the IMF for the next bailout.
A revised summary ran urgently through the federal cabinet for this purpose has been given the nod.
The National Electric Power Regulatory Authority (Nepra) has revised the date of a public hearing from July 8 to July 10.
The hearing was sought by the Power Division for Rs5.72 per unit average hike – moving up to Rs7.12 per unit for higher-end domestic and other consumer categories. However, Nepra has been asked to wait for the revised summary.
The government had set the average national base tariff, including for K-Electric, at Rs35.50 per unit for the ongoing fiscal year against Rs27.78 in the previous one – a hike of Rs7.72.
The cabinet had approved an increase of Rs3.95 in the tariff for protected consumers using up to 100 units.
A hike of Rs4.10 per unit was given the nod for those who used 101 to 200 units.
PM Shehbaz has called for a federal cabinet meeting to be held on Wednesday (today). The meeting will focus on approving the relief measures for electricity consumers and reviewing the overall economic situation.
In a related development, sources said the government had decided to abolish the pro-rata system for electricity billing and revert to the previous method.
They revealed that electricity distribution companies had secretly implemented the pro-rata system since March, leading to widespread overbilling issues.
Last month, it was revealed that over 0.3 million power consumers had moved out of the protected category and paid inflated electricity bills in the month of June because of the new system introduced by distribution companies on the orders of the energy ministry.
However, the new system resulted in charging additional units from consumers to complete the 30-day billing cycle, leading to millions of consumers receiving average bills.
Around 326,350 protected consumers had to pay double the bills because of the additional units charged.
The sources said all the distribution companies were found to be involved in overcharging the consumers, prompting PM Shehbaz and Interior Minister Mohsin Naqvi to take immediate notice of the issue.
Afghan refugees
Prime Minister Shehbaz Sharif on Tuesday urged the international community to recognise the burden being shouldered by Pakistan while hosting such a large refugee population and demonstrate collective responsibility.
The prime minister, in a meeting with the United Nations High Commissioner for Refugees (UNHCR) Filippo Grandi at the PM House, reaffirmed Pakistan’s commitment to addressing the protection and safety needs of people in vulnerable situations and underscored that the international community needed to be mindful of the socio-economic challenges and security threats being faced by Pakistan in this regard, according to a PM Office press release.
While recalling Pakistan’s longstanding partnership with UNHCR, the prime minister appreciated the UN agency’s support to Pakistan in hosting Afghan refugees for over four decades.
He noted that despite numerous challenges, Pakistan had hosted Afghan refugees with exemplary respect and dignity.
He sought UNHCR’s support in mobilizing adequate resources to supplement Pakistan’s efforts in this regard and urged the UN body to play its role in promoting durable solutions to address the situation of Afghan refugees, including through safe and dignified return and reintegration in their homeland, as well as third-country relocation.
The UN High Commissioner expressed gratitude for Pakistan’s generosity and hospitality in hosting millions of Afghan refugees for the past many decades and assured that UNHCR would continue to work closely with Pakistan to fulfill the basic needs of the Afghan refugees.
UN High Commissioner Grandi is on a three-day official visit to Pakistan from July 7-9.
Digitisation, SOEs’ privatisation
Prime Minister Shehbaz Sharif on Tuesday said that the government was taking effective measures for economic revival by carrying out the digitisation of the economy including the Federal Board of Revenue (FBR), and privatisation of the State Owned Enterprises (SOEs).
The prime minister, in a meeting with a delegation led by British educationist and former Head of British Prime Minister’s Delivery Unit Sir Michael Bayldon Barber, said the decades-old ties between Pakistan and the United Kingdom were getting stronger with the passage of time.
He said that Pakistan greatly values its relations with the UK as being a valued partner, the UK was assisting Pakistan in multiple sectors for which the government was grateful to them.
The prime minister reiterated the resolve to further strengthen the bilateral relations.
He told the delegation that the government was pursuing a policy of downsizing and abolishing the low-performing entities to reduce its expenditures.
The prime minister said that the government was taking measures to boost exports and tax base as the country had immense potential for exports related to information technology and agriculture.
During the briefing, the delegation members were told that a task management system had been established to examine the performance of the federal ministries.
Sir Michael Barber appreciated the government’s economic revival plan and said that it was moving in the right direction in its endeavours for economic reforms.
The delegation head expressed the hope that under the prime minister’s leadership, Pakistan would soon get rid of economic challenges and assured the UK’s cooperation in all sectors.
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