The government has abandoned its plan to change the electricity tariff rebasing date from July 1 to January 1 each year after the International Monetary Fund declined to support the scheme, Business Recorder reported.

The Economic Coordination Committee approved a specific plan from the Power Division designed to transfer financial burdens onto consumers during the winter months, when energy consumption and bills are generally lower than in summer, on January 17, 2025.

Sources told the news outlet that although the finance ministry raised no objections to the Power Division’s proposal, recognising that it had no financial or subsidy implications.

The ministry recommended that the Power Division consult with development partners such as the IMF, World Bank, and Asian Development Bank as part of reform efforts before presenting the proposal to the ECC.

The Power Division explained that the National Electric Power Regulatory Authority sets the consumer tariffs for distribution companies (Discos) and K-Electric based on specific regulations established in the law. The last uniform tariff was announced on July 14, 2024.

According to the rules, Discos must submit their minimum requirements for tariff determination by January 31 each year. This process includes internal meetings, a public hearing, and ultimately, a government notification. Typically, the government announces the new tariffs in July, effective from July 1.

The Power Division noted that it’s “unfortunate” that consumers often face high fuel charges adjustments (FCAs) and annual tariff increases at the same time during the summer months.

The Division admitted that the timing leads to significant hikes in electricity bills and public dissatisfaction, which has resulted in protests. It believed that changing the timing of the annual rebasing could help stabilise electricity prices throughout the year.

The National Electricity Plan also requires NEPRA to review its guidelines to ensure that regulatory processes align with planning and tariff determinations.

After laying out the proposal, the Power Division requested the ECC to approve two things:

• To allow NEPRA to change the timing of tariff determinations to January 1
• To authori e the Power Division to approach NEPRA to implement these changes.

Read more

Consumers, farmers using 300 units monthly to get FCA savings benefit

Karachi residents may see electricity rates drop by Rs4.95 per unit

This is the surcharge you will be paying on your electricity bills now

But when the development partners, including the IMF, were consulted, they did not support the plan. They advised the government to focus on reforms and issues rather than introducing new initiatives.

But the plan has been put on hold following this discouraging feedback from the IMF.

Two weeks ago, electricity prices for consumers of state-owned distribution companies were reduced by Rs1.22 for DISCOs and Rs1.23 for KE consumers.

The KE sought a Rs4.95 per unit reduction in power tariffs for December 2024 due to a fuel charge adjustment on February 25.