Islamabad - The government is all set to give an electric shock to the masses by increasing domestic electricity tariff by 30 percent by the start of October as per its agreement with the International Monetary Fund (IMF) for $ 6.4 billion loan under the Extended Fund Facility (EFF).
Pakistan has agreed with IMF to gradually withdraw the power subsidy by increasing tariff as it has already enhanced prices for industrial and commercial consumers from August. Earlier, the government increased the power tariff up to 116 per cent for commercial and industrial consumers as well as for housing societies and the consumers of Azad Jammu and Kashmir. In the second phase, the government will increase the tariff by 30 percent for domestic consumers from October. “The power tariff for domestic and agricultural consumers will go up ranging between 30 percent and 70 percent from October 1 in the second phase while consumers will face an increase by Rs 3 to Rs 6 per unit, depending upon which category they fall into, sources said on Friday. However, the government would provide subsidy to the consumers using 200 units.
“Tariff for consumption up to 200 kWh will be retained and income support programmes will cushion the impact of future tariff increases on the most vulnerable segments of the population. Within 2 or 3 years of the programme, subsidies will be phased out for users above 200 kWh and reduced for all except for the lowest consumers in the 200 kWh range,” Pakistan has undertaken in the agreement with the IMF.
Sources in the Finance Ministry told The Nation that the government would reduce the power subsidy by around Rs 150 billion by increasing the power tariff during the ongoing financial year 2013-2014. The ministry has reportedly released Rs 34 billion to the Water and Power Ministry under the head of Tariff Differential Subsidy (TDS).
The sources further said the federal government is expected to generate revenue ranging between Rs 325 and Rs 350 billion by increasing tariff on commercial, industrial, agriculture and domestic consumers across the board during the current fiscal year, adding the amount of subsidy for the current financial year had been estimated at Rs 500 billion. The official further said the amount of subsidy for the consumers using electricity up to 200 units a month was Rs 150 billion per annum and they formed 64 percent of domestic consumers.