Imran Khan govt in Pakistan to raise power tariff amid increasing IMF debt

Pakistani Prime Minister Imran Khan

Despite an outcry by its citizens over massive blackout recently, Imran Khan government on Friday has once again planned to raise the power tariffs amid increasing IMF debt.

It will be increasing the power tariff by (Pakistani Rupee) Rs 1.90 per unit to revive the stalled IMF loan programme under the USD 6 billion Extended Fund Facility (EFF), top official sources told The News International.

The government has projected that the circular debt will mount up to Rs 2,805 billion by the end of June 2021, putting the bleeding power sector into a severe cash constraint situation.

The PTI government led by Imran Khan has already hiked the power tariff several times, but it has not helped.

A hike of Rs 3.30 per unit had been agreed on by the government in phases. The first hike of Rs 1.90 per unit is expected to be announced in the next few days, reported The News International.

The multilateral creditors, including the IMF, World Bank and Asian Development Bank, had often suggested increasing power tariffs in the past to fix the problem of circular debt.

The circular debt was persistently raising trends and it might escalate to Rs 2,805 billion by the end of June 2021. It had climbed to Rs 2,150 billion during the last financial year 2019-20, indicating that the bleeding of the power sector surged by Rs 538 billion just in 12 months from July 2019 to June 30, 2020, reported The News International.

This shows that the circular debt went up by Rs 44.8 billion on a monthly basis in the last financial year.

Meanwhile, the Imran government shifted the blame on the COVID-19 pandemic and said that the situation ballooned the circular debt in the second half of the last fiscal year.

The government performance was also exposed as it claimed that the monthly accumulation of circular debt was curtailed at just Rs 10 to 12 billion. However, it proved wrong because senior officials of the power division did not include all the heads while calculating the circular debt, reported The News International.

The amount payable to IPPs is projected to grow from Rs 1,038 billion at the end of June 2020 to Rs 1,711 billion by the end of June 2021. "There is a projection that the circular debt might increase by Rs 499 billion in the financial year 2020-21," said an official.


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel