Raise in Electricity Price Per Unit in Pakistan – Revenue Enhancement Efforts

“The government has made a decision to generate an additional Rs 335 billion in revenue during the upcoming fiscal year. This move aims to provide financial support for the power sector’s debts and obligations. The goal is to tackle the sector’s financial challenges by ensuring sufficient funds are available.”

The government has taken a significant step to boost revenue by an estimated Rs 335 billion in the upcoming fiscal year. This move is specifically aimed at addressing the power sector’s financial challenges, including the debts and liabilities it carries. The goal is to secure the necessary funds to support and strengthen the power sector’s financial stability.

On Wednesday, during a meeting chaired by Finance Minister Ishaq Dar, the Cabinet’s Economic Coordination Committee (ECC) made these important decisions. The committee gathered to discuss and finalize measures aimed at addressing the economic challenges. The decisions were made with the goal of promoting financial coordination and stability. To get other details related to electricity in Pakistan visit official website.

 Electricity Rates For Commercial Consumers During the Peak Hours

According to a senior official from the power division, the government’s efforts to reach a consensus on market closures after sunset for energy conservation have not been successful. As a result, a new proposal will be presented to the Cabinet on Thursday. This proposal suggests doubling the electricity rates for commercial consumers during peak hours, which start after 8 pm. The aim is to encourage energy conservation in a different way and address the increasing demand for electricity during those hours.

In light of the situation, the official mentioned that the central government does not have the authority to impose business closures on provincial governments through administrative means. However, they can employ a different approach by utilizing pricing as a policy tool. By implementing higher rates during peak hours, the aim is to discourage excessive electricity consumption or, at the very least, generate additional funds to meet the growing demand for electricity.

It has been stated that these surcharges will be extended to K-Electric consumers in the upcoming fiscal year, ensuring a consistent tariff nationwide. This step aims to maintain uniformity in pricing across the country.

The International Monetary Fund (IMF) has insisted on its continuation for the upcoming fiscal year. This measure aims to allocate funds for servicing or repaying approximately Rs 800 billion debt held by the Power Holding Private Limited.

The government had initially resisted the IMF’s request to prolong the additional surcharge. However, in order to secure an economic bailout and prevent a sovereign default, they eventually agreed. As part of the financing plan, which involves a new surcharge for the fiscal year 2023-24, protected consumers consuming up to 200 units will face an additional cost of 43 paisa per unit. For all other consumers, the surcharge will be raised to Rs 3.23 per unit over the next year.

Furthermore, the ECC has granted its approval for a tariff hike of Rs 1.56 per unit, applicable to all KE consumers except those falling under the protected category who consume fewer than 100 units. The recovery period for this increase spans three months, specifically from March to May 2023.

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