The International Monetary Fund (IMF) said on Saturday it is in discussions with Pakistan authorities over proposed power tariff revisions, stressing that any changes should avoid placing additional burdens on middle- and lower-income households.
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In a statement to Reuters, the IMF said the talks would assess whether the government’s proposed tariff overhaul aligns with commitments under Pakistan’s $7 billion Extended Fund Facility (EFF) and examine its impact on macroeconomic stability, including inflation.
Islamabad recently unveiled a restructuring plan aimed at easing costs for industry while shifting more of the power sector burden onto residential consumers. Analysts say the move could push inflation up by about 1.1 percentage points over the next year, even as it lowers industrial electricity prices by 13–15 percent and removes roughly Rs102 billion in subsidies.
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Electricity tariffs remain politically sensitive because power costs carry heavy weight in Pakistan’s consumer price index. Inflation has fallen sharply from nearly 40 percent in 2023 to about 5.8 percent, but analysts warn higher household tariffs could renew price pressures at a time of fragile purchasing power.
The reforms are part of broader IMF-backed efforts to curb the power sector’s chronic circular debt — a chain of unpaid obligations among producers, distributors and the government. The IMF said debt accumulation has remained within programme targets due to improved bill recoveries and loss reduction.
Consultants and energy analysts caution that the overhaul could significantly raise bills for many households. Consumers using 100–300 units per month may see effective increases of up to 76 percent because of new fixed charges, while even the lowest-income users face a Rs400 monthly fixed fee.
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Prime Minister Shehbaz Sharif has ordered a review of related solar-pricing changes approved by the National Electric Power Regulatory Authority (NEPRA), amid concerns over shifting costs between rooftop-solar users and grid consumers.