Economic Coordination Committee (ECC) has approved increasing the electricity prices by Rs. 7.91 per unit said by the Federal Finance Minister, Miftah Ismail, on Monday.
The decision has been taken in line with the International Monetary Fund’s demands and the power distribution companies’ requests. Currently, the basic power tariff is Rs16.91 per unit and with an increase of Rs7.9078 per unit, it will be more than Rs24 per unit.
Replying to media queries, the Minister said that the government will gradually increase the prices of electricity. The matter will also be discussed in the cabinet meeting today.
The NEPRA cited an increase in fuel prices, capacity cost, and the impact of the devaluation of the Pakistani rupee as reasons behind the significant increase in power tariff.
Earlier, addressing a post-budget conference named “Pakistan’s Economy- Way Forward” organized by ICA Pakistan, Miftah said that Pakistan would have defaulted if the government did not abolish subsidies on petroleum products.
The government is still offering Rs. 53 per liter subsidy on high-speed diesel, Rs. 19 on petrol, Rs. 24 on kerosene, and Rs. 23 per liter on light diesel.
The International Monetary Fund (IMF) has insisted on abolishing the subsidies on petroleum products. Sri Lanka also gave subsidies to its public and it, eventually, defaulted. Today, Sri Lanka is purchasing expensive oil and they do not have funds to buy medicines for their people, he said.
The Finance minister also said that the government will have to further increase the prices of petroleum products and a difficult situation could arise in mid-July.
He said that once the agreement with the IMF is reached and Chinese banks extend their loan facility to Pakistan, the market will regain confidence.
On the other hand, if we do not settle our matters with IMF, the World Bank will hold $9.5 billion and the ADB $8.8 billion in the financing, adding that Pakistan needs $42 billion in the next fiscal year and we have to pay $21 billion in debt.
He said that the government has announced incentives for agricultural development in the budget and would also announce the export policy in a few days.