IMF allows Pakistan to cut power tariff

The International Monetary Fund (IMF) has allowed the Pakistan government to reduce electricity tariffs by Rs1 per kilowatt-hour for all consumers.

The relief will be financed through revenue collected via a levy imposed on captive power plants using natural gas, the IMF said in a statement.

The move is part of a broader relief package the government is working on for electricity users.

According to official sources, the reduction could lessen the financial burden on consumers by up to Rs100 billion. A household consuming 500 units of electricity would see a monthly saving of Rs500 under the new plan.

The relief will be funded through revenue generated from a levy imposed on gas consumed by captive power plants. The IMF stated that the decision is part of ongoing reforms in the energy sector.

The development comes days after Pakistan and the IMF reached a staff-level agreement, unlocking access to an additional $1 billion under the Extended Fund Facility (EFF).

According to the IMF, inflation in Pakistan has reached its lowest point since 2015, and the country’s economic indicators show signs of further improvement.

The IMF's executive board will approve the EFF's second tranche of $1 billion and the $1.3 billion RSF new facility either by the end of April or early May, according to Pakistani authorities.

However, the fund will release only $1 billion while the $1.3 billion will be given over a period of 28 months and subject to implementing about 13 conditions, including carbon levy.