In Islamabad, the International Monetary Fund (IMF) has agreed to offer relief to 200-unit electricity consumers. The IMF has granted permission for the collection of electricity bills from such consumers in three monthly installments. However, in return, they have requested a 50% increase in gas prices starting from July and a crackdown on electricity theft.
Sources within the Ministry of Energy have indicated that this agreement between the IMF and Pakistani authorities is contingent upon the approval of the caretaker Prime Minister, Anwarul Haq Kakar, and his cabinet. According to reports, the IMF has conditionally allowed the recovery of electricity bills for August to be paid in three monthly installments for consumers who are not entitled to subsidies and who consume up to 200 units of electricity per month.
It’s important to note that Lifeline and Protected customers will not be eligible for this temporary relief since their electricity rates were not increased last month. As a result, only approximately 4 million, or around 10% of consumers, will qualify for this temporary relief.
The government had initially requested the IMF to permit bill installments for consumers consuming 400 units of electricity per month, which would have provided relief to 32 million, or 81% of consumers. However, this request was rejected by the IMF. Additionally, for consumers using up to 100 units, the government has raised the per-unit price by Rs 7.28.
Regarding this temporary relief, Caretaker Energy Minister Muhammad Ali did not respond to requests for comments. Sources suggest that the IMF has urged Pakistan to simultaneously announce relief for a specific segment of electricity consumers, initiate a crackdown on electricity theft, and implement a gas price hike.
The IMF’s insistence on increasing gas prices aligns with the decision made by the Oil and Gas Regulatory Authority (OGRA), although the official notification is still pending. The previous government did not raise gas prices for political reasons, which has contributed to the accumulating debt in the gas sector.
In June of this year, OGRA announced a 50% price hike for customers of Sui Northern Gas Pipeline Limited and also approved a 45% increase in prices for Sui Southern Gas Company Limited. This translates to an increase in gas prices by Rs 417.23 per unit.
Ogra was supposed to issue the notification for this increase within 45 days, but the previous government did not implement the gas price increase, in contravention of the law. The IMF has also requested Pakistan to implement a weighted average gas price to ensure that consumers are charged the full price of imported gas, necessitating the determination of an average price for imported LNG and locally sourced gas.
Furthermore, according to sources, the IMF has demanded a crackdown on electricity theft and the announcement of a plan to recover arrears from defaulters.