Following the demands of the International Monetary Fund (IMF) to suspend the subsidy being given to the power companies, the government is likely to increase electricity tariff by Rs3 per unit.
According to details, a sum of Rs178 billion had been paid to the power companies under the subsidy in 2018, while a subsidy of Rs345 billion had been in 2013.
The IMF had repeatedly demanded the government to decrease the losses of power companies and improving the electricity supply system.
The IMF is of the view that subsidy being given to the power companies is a burden on the budget.
Last years, the IMF delegation paid a visit to headquarters of National Electric Power Regulatory Authority (NEPRA) and expressed grave reservations over line losses, non-payments and soaring deficit.
The delegation inquired why final authority to hike power tariffs rests with the federal govt. The IMF delegation recommended to eliminate the role of government in deciding the power tariff.
The delegation also asked why summary aimed at increasing electricity power was not implemented thus far. The IMF has also expressed concerns over increasing power losses and circular debt, which has recently crossed Rs1.2 trillion.
The delegation of IMF recommended to slash duration of submission of NEPRA’s progress report from 30 days to 15 days.