The Punjab government had decided to immediately withdraw the Rs14 per unit electricity subsidy for consumers in the Islamabad Capital Territory, yielding to pressure from the International Monetary Fund (IMF).

This decision meant that consumers in the Islamabad Capital Territory would not receive the Rs14 per unit subsidy for September, as stated in a notification issued by the Islamabad Electricity Supply Company (IESCO).

Residents of Islamabad city and surrounding areas would receive their electricity bills at the newly increased rates, which the federal government had implemented starting July 1 to meet IMF conditions. The federal government had raised electricity prices by up to 51% in order to satisfy the IMF’s requirements, yet still struggled to secure loan approval.

Punjab Information Minister Azma Bukhari confirmed to The Express Tribune that the subsidy had been withdrawn for the Islamabad Capital Territory. “As per a telephonic discussion dated 03-09-2024, instructions regarding the discontinuation of the CM Punjab Relief at Rs14 per unit for domestic single-phase consumers consuming between 201 to 500 units were issued for the Islamabad Capital Territory for the billing month of September 2024,” the notification stated.

The subsidy would continue for consumers in Punjab until September 30.

“Punjab Chief Minister Maryam Nawaz Sharif wanted to give the subsidy to the consumers of Islamabad but due to the IMF agreement the citizens of Islamabad could not get this relief,” Bukhari said.

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Last week, it was reported that the IMF had rejected Pakistan’s new proposal to reduce electricity prices by Rs6 per unit through an injection of Rs2.8 trillion. This plan was based on weak assumptions, including receiving Rs1.4 trillion from the four federating units, such as Khyber-Pakhtunkhwa, and securing additional commercial loans.

The federal government had also postponed the implementation of a 51% increase in electricity prices for consumers using up to 200 units until October. This temporary relief is set to end, resulting in significant price shocks for lower-income consumers starting next month. Meanwhile, consumers in three provinces who use more than 200 units have already been feeling the impact.

In August, the Punjab government had approved a Rs14 per unit subsidy for electricity bills in both Punjab and Islamabad for consumers using between 201 and 500 units. The provincial finance minister reportedly stated that the actual cost of the subsidy was Rs90 billion, while the Punjab chief minister claimed it would amount to Rs45 billion.

Discontinuing the electricity subsidy for Islamabad Capital Territory consumers is expected to save several billion rupees. The two-month relief for Punjab consumers is now estimated to cost the provincial government around Rs60 billion.