Govt to seek IMF consent for power tariff rebasing

Pakistan has decided to formally convey to the International Monetary Fund (IMF) the planned rebasing of electricity tariff to seek the lender's consent to avoid a double financial strain on end-consumers and stave off the possibility of public protests.

Earlier, the government had verbally informed the IMF about the rebasing plan. High electricity rates have the potential to trigger public outcry and tariff rebasing is expected to put an end to such a possibility.

The government has issued policy guidelines to the National Electric Power Regulatory Authority (Nepra) on revising timelines for the tariff determination process by amending the legal and regulatory framework in such a way that tariff rebasing takes effect from January 1 each year, after the completion of regulatory proceedings.

Implications of this adjustment have also been taken into account in light of negotiations with the IMF. The Finance Division indicated in a recent meeting of the Economic Coordination Committee (ECC) that the proposal had been discussed informally with the IMF during previous meetings. It recommended formally notifying the lender about the change to ensure alignment with international commitments.

Now, the government has decided to communicate details of the proposal to the IMF. At present, annual rebasing begins on July 1, during summer months, when electricity demand and costs are at their peak. This leads to heightened financial pressure on consumers.

Officials told The Express Tribune that the proposed shift to January 1 would mitigate such challenges by aligning tariff adjustment with the lower consumption period in winter. This will ensure a smooth financial transition for consumers and contribute to a more predictable and balanced electricity pricing throughout the year.

Nepra sources said that the regulator had supported, in principle, the proposal while the Power Division expressed its commitment to working closely with the regulator to implement the change.

According to the current tariff determination process followed by Nepra, under Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 and Rule 17 of the Nepra (Tariff Standards and Procedure) Rules, 1998, Nepra determines the end-consumer tariff for ex-Wapda distribution companies (DISCOs) and K-Electric. The federal government last notified a uniform tariff on July 14, 2024.

As per the Nepra (Tariff Standards and Procedure) Rules, 1998 and the Nepra Determination of Consumer End-Tariff Guidelines, 2015, DISCOs are required to submit their minimum requirements by January 31 each year to initiate the tariff determination process.

This process includes internal meetings, public hearings, tariff determination and eventual notification by the government. Currently, the rebasing takes effect from July 1 every year, which coincides with peak summer months. This has caused affordability issues for consumers, resulting in increased costs during periods of high electricity demand. It has sparked public dissatisfaction and protests.