Pakistan imposes power surcharge for next fiscal year in bid to cover 'obligations'

The cash-strapped government of Pakistan abided by yet another demand of the International Monetary Fund (IMF) on Wednesday by going ahead with imposing a surcharge on electricity. According to local news outlet Dawn, electricity consumers across the country will have to pay a surcharge of up to PKR 3.23 per unit in the next fiscal year. 

Karachi-based K-Electric has also been given the green light to surge the tariff by PKR 1.56 per unit in the current month, and PKR 6.11 per unit in April and May. This is to make sure that electricity rates across companies remain uniform to one another. The move comes in a bid to produce PKR 335 billion in the next fiscal year to help reduce debt and liabilities in the electricity sector.

Pakistan's power division has said that the government can exercise the Nepra law to “collect surcharges from the consumers for the fulfilment of any financial obligation of the federal government with respect to electric power services within the bracket of 10pc of the aggregate revenue requirement of all electricity suppliers." 

Pakistan to increase power tariff under IMF's pressure

The decision was taken at a meeting held by the Economic Coordination Committee (ECC) of the Pakistani cabinet. It was presided over by Finance Minister Ishaq Dar. The ECC also “approved the proposal (of the power division) regarding the enhancement of surcharge for the financial year 2024 to cover federal government obligations towards power producers," an official statement said.

"Further, these surcharges for FY24 will also be applied to K-Electric consumers to maintain a uniform tariff across the country,” it added. Moreover, the federal cabinet will be presented with a separate case on Thursday to double the rates of electricity during peak hours (after 8 pm), according to a senior power division official. This comes after the government's botched efforts to form a consensus for market closures after sunset in order to save energy.