ISLAMABAD: The government has approved an additional surcharge of up to Rs3.82 for electricity consumers across the country for the next fiscal year to placate the International Monetary Fund so that it unlocks the stalled funding programme.

This decision was made during a meeting of the Economic Coordination Committee on Wednesday which approved the tariff rationalization for K-Electric (KE). It did this by making adjustments on consumption from July 2022 to September 2022 and recovery from consumers from March 2023 to May 2023, respectively.

The ECC approval was granted after the Energy ministry submitted a summary on a uniform tariff for KE.

“The ECC considered another summary of the Energy ministry on the uniform tariff for K-Electric at par with XWDISCOS 1st Quarter 2022-23 and allowed tariff rationalization by way of adjustments for K-Electric on the consumption of Feb-23 to March-23 and to recover from consumers in March-2023 to April 2023 respectively,” said a press release.

The ECC also greenlit a proposal to enhance the surcharge for the financial year 2024 to cover the federal government’s obligations towards power producers. Such surcharges for FY24 would also be applied to KE consumers to maintain uniform tariffs across the country, it added.

The government is expected to earn Rs335 billion from the additional surcharge, sources said. They gave the following breakdown of electricity rates for KE consumers:

• Electricity will be Rs4 more expensive for consumers using 100 units
• Electricity will be Rs3.2 more expensive for consumers using 100 units

“We gave a circular debt management plan for the power sector in which there are around Rs675 billion of additional subsidies. If we increase the tariff Rs7, the IMF is not accepting this. They say you should decrease subsidies and demand that tariffs be increased from Rs12 to Rs13,” economic expert Mehtab Haider told Aaj News last month.

This decision comes a day after Pakistan’s [annual Consumer Price Index-based inflation soared to 31.5%, the highest in Pakistan’s history. February 2022 clocked in at 12.2%.

The cash-strapped country is painful steps to secure a $1 billion loan from the international lender. It is raising taxes, and removing blanket subsidies and artificial curbs on the currency exchange rate.

The four items on the incomplete IMF loan programme agenda according to what has been reported in the media are:

• A hike in the State Bank of Pakistan’s interest rate to represent general inflation (which is expected today, Thursday)
• Exchange rate movement to cater for outflows to Afghanistan
• Written assurances for external financing gap from friendly nations
• Continuation of Rs3.39 per unit financing cost surcharge on electricity consumers

“Now if we lessen subsidies then tariffs will increase on people. If there is less development amid a choked economy after the floods, inflation will shoot up. Defence is very difficult for the government politically. See non-combat expenditures can be cut,” Haider had said.

All electricity providing companies hold monthly or quarterly meetings on fuel adjustments. So this is one of the approvals to have some tariffs adjusted.