Pakistan has presented a plan to the International Monetary Fund (IMF) that includes a proposal to reduce electricity prices by Rs6 per unit. The plan outlines that federal and provincial governments will arrange funding amounting to Rs2.8 trillion.
According to a report by the Express Tribune, securing funding for this plan may prove challenging, and gaining approval from the IMF may also be difficult.
The government will need to make cuts to the federal public sector development program and eliminate certain subsidies in the budget for various sectors.
Commercial loans and dividends from state-owned enterprises will contribute to raising a total of Rs1.4 trillion, while the remaining Rs1.4 trillion will be sourced from the share of funds received by the provinces under the National Finance Commission (NFC).
The Khyber Pakhtunkhwa government has outright rejected giving its share from the NFC, and the other provinces have yet to respond.
The Ministry of Finance has also shown reluctance to take ownership of this plan, although the Prime Minister’s Office is making significant efforts to ensure its success.
Under this plan, Rs2.8 trillion will be used to close down inefficient power plants. Contracts with Independent Power Producers (IPPs) will either be terminated or their terms relaxed. The federal government is currently in discussions with stakeholders regarding this matter.
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Sources indicate that the provinces are hesitant to participate in this plan because, except for Khyber Pakhtunkhwa, the budgets of all other provinces are already out of control.
The entire benefit of this plan will primarily accrue to the central government led by the Pakistan Muslim League (Nawaz).
