The federal government has made a “new plan” to lower the baseline power tariff by Rs8 to Rs10 per unit and “eliminate” circular debt, in response to the International Monetary Fund’s rejection of the original proposal to reduce tariffs via tax cuts, sources said on Friday.

The plan would be presented to the Fund during their upcoming visit to Pakistan next month.

Sources added that the plan focuses on eliminating the circular debt, with a target of reducing loans by up to Rs1.3 trillion.

The anticipated decrease in loans was intended to address financial losses within the electricity sector.

The IMF review mission is scheduled to arrive in Pakistan at the beginning of next month and discussions regarding the plan were expected to be a focal point of its meetings.

It has been reported that the IMF earlier rejected a proposal to lower taxes as a means to reduce electricity rates.

Last year, the government planned to reduce electricity tariffs by Rs12 per unit by March 2025 through agreements with private Independent Power Producers, government power plants, and renewable energy sources such as wind and solar.

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