Federal cabinet approves the plan to increase the electricity prices.
The updated circular debt management plan (CDMP), which will be presented to the IMF in the coming days, was agreed by the cabinet a plan to hike electricity rates on Sunday.
Throughout four quarterly adjustments in February–March 2023, March–May 2023, June–August 2023, and September–November 2023, the government would increase power tariffs by Rs. 7.91 per unit.
The government would charge Rs. 3.21 per unit for the current cycle till March, Rs. 0.69 from March to May, and Rs. 1.64 per unit from June to August 2023, all in accordance with the CDMP plan.
The government would increase the cost of electricity by Rs. 1.98 per unit from September to November. Consumers would also see a base pricing increase, going from Rs. 15.28 per unit in June 2022 to Rs. 23.39 in June 2023.
The government has also pledged to stop providing exporters with the Rs. 65 billion in electricity subsidies by March 2023.
It is understandable that the government expects to raise Rs. 51 billion by eliminating electricity subsidies for exporters and Rs. 14 billion by terminating the Kissan Package electricity subsidies in March 2023.
The expectation is that the export industry will no longer receive the Rs. 12.13 per unit electricity subsidy.
Nearly Rs. 250 billion would be recouped from electricity users by June 2023. The plan stipulates a 3.39 rupee per unit premium.
Furthermore, the growth in quarterly adjustments through June will result in earnings of Rs. 73 billion.
Due to the quarterly adjustment, electricity prices this month could be up to Rs. 4.46 higher than they are now.
Evidently, the administration is exerting every effort to secure the IMF bailout, at the expense of the general populace.
The lender requested a base pricing increase of approximately Rs. 4.06 per unit during last week’s negotiations, and the aforementioned plan indicates that the government has given in.
The Power Division this week put out a number of proposals for price increases, including a basic tariff increase of 7.74 rupees per unit on average and a quarterly rate increase of 4.26 rupees per unit.
As per IMF guidelines, the average base rate, which is currently about Rs. 24 per unit, might increase to Rs. 32 per unit by June 2023.
Given that the base rate was already increased by Rs. 7.91 per unit earlier this fiscal year, if it were to be put into effect, it would be the government’s second increase overall.
The initial price increase did not stop losses and compelled those who could to migrate to alternative energy sources.
The subsequent hike will be far more challenging and, for many, unmanageable.
