Prime Minister Shehbaz Sharif announced that the government would maintain stable electricity rates for protected customers who consume up to 200 units of power for three months, specifically July, August, and September. This move comes in response to public outcry over a significant tariff increase, which was part of the conditions to secure a loan from the International Monetary Fund (IMF).
Speaking at an event in Islamabad, Prime Minister Sharif stated that the subsidy would benefit 94% of household electricity consumers, costing the national exchequer Rs50 billion. This subsidy will be funded through the budget’s development fund. Sharif highlighted that the previous government, led by Pakistan Tehreek-e-Insaf (PTI), had reduced power prices without making corresponding budget allocations.
Under this new subsidy package, the per-unit cost of electricity for these consumers will range between Rs4 to Rs5. Consumers of K-Electric will also be eligible for this subsidy. The prime minister emphasized that this decision aims to provide relief to the common man during the peak summer months when electricity consumption is typically higher.
Sharif explained that the summer months of July, August, and September are particularly challenging due to increased electricity usage. However, as the weather becomes more pleasant in October, electricity consumption tends to decrease. This subsidy is designed to help households cope with the high costs during the summer.
According to Reuters, Pakistan’s annual power usage is expected to fall consecutively for the first time in 16 years due to higher tariffs curbing household consumption. The prime minister assured the public of further relief measures, attributing them to ongoing government efforts to tax the elite class, expand the tax net, close non-performing entities, and reduce financial leakages.
Sharif also mentioned that the government is in the process of negotiating a three-year program with the IMF. This program is essential for Pakistan to manage its fiscal challenges, and the IMF has been informed about the relief measures for domestic power consumers. He emphasized that entering a new IMF program is necessary for Pakistan’s financial stability.
For the fiscal year that began on July 1, Pakistan has set a tax revenue target of 13 trillion rupees ($47 billion), representing a nearly 40% increase from the previous year. The government aims to reduce its fiscal deficit to 5.9% of GDP from 7.4% last year.
Earlier this month, to unlock the IMF program of over $6 billion, the federal government announced significant increases in the end-power tariff for both protected and unprotected consumers, which was to take effect from July 1, 2024. For protected consumers, those consuming 1-100 units saw their tariff increase by Rs3.95 per unit, while those consuming 101-200 units experienced a Rs4.10 per unit increase. Unprotected consumers faced even steeper hikes, with those in the 1-100 units slab seeing a 43% increase in their tariff.
These tariff increases have caused considerable concern among consumers. For instance, unprotected consumers using 101-200 units per month now pay 31% more, with their tariff rising by Rs7.15 per unit to Rs30.10 from Rs22.95 per unit. Those consuming 201-300 units per month faced a 26% increase, while those in the 301-400 units slab saw a 22% hike.
Consumers in the higher usage categories also experienced significant increases. For example, those using 401-500 units per month faced a 17% increase, while those consuming 501-600 units per month also saw a 17% hike. Consumers using 601-700 units per month faced a 16% increase, and those consuming above 700 units per month saw a 14% hike in their tariffs.
Prime Minister Shehbaz Sharif’s announcement to maintain stable electricity rates for protected consumers aims to provide much-needed relief during the peak summer months. This subsidy, funded through the budget’s development fund, is designed to alleviate the financial burden on 94% of household consumers. As the government negotiates a new IMF program and implements measures to stabilize the economy, it remains committed to easing the cost of living for its citizens.
