ISLAMABAD: Government is contemplating increase of Rs3.30 per unit in the electricity tariff by mid-January, a taxation of up to 200 billion rupees and a possible increase in discount rate ahead of talks with International Monetary Fund, officials said Thursday

The government hopes these measures will help restore 6 billion dollars IMF program which had been stalled since February 2020. The hikes will be construed as mini budget “but the government has no other option”, a senior official confided to The News.

The official was talking to The News after he attended a high level meeting on energy chaired by Prime Minister Imran Khan here on Wednesday. Federal Minister for Energy Mr Omar Ayub Khan, Federal Minister for Economic Affairs Division Makhdoom Khusru, Federal Minister for Finance and Revenue Dr Abdul Hafeez Shaikh, and three Special Assistants to Prime Minister, Mr Tabish Gohar, Mr Nadeem Babar and Dr Waqar Masud and relevant senior officials attended the meeting.

In the current month IMF mission is due for talks paving a way to revive the $6 billion programme. The Fund wants the government to charge the electricity consumers full cost of electricity generation to contain the circular debt that currently stands at Rs2,300 billion. Apart from it, the Fund wants the other prior actions of increasing taxation to Rs180-200 billion more in the current fiscal year to achieve the revenue target of Rs4.9 trillion. The IMF programme is stalled due to disagreement over additional tax measures and increase in electricity prices.

“The main issue the government facing is the fiscal crunch and there is an uphill task of debt servicing payments in future and Pakistan is now in the lurch and is left with no option but to revive the programme,” the official said. IMF wants, the official said, the government to get the Electric Power Act bill in the National Assembly passed enabling it to pass on the cost of inefficiency and theft to the consumers through imposition of surcharges.

“The government introduced the bill to this effect on June 10 but it has not yet been approved. The proposed amendments are also aimed at timely notifying the increase in electricity prices to stop the buildup of the circular debt,” the official added

The government earlier planned to take the masses of Pakistan into confidence before December 31, 2020 about the increase in tariff but Prime Minister indicated he would hold presser or address the nation by mid of next month with regard to increase the tariff, once the talks with IMF in next month are finalised and Nepra formally announces the new base tariff by January 15, 2020, a top energy Mijistry official said.

“Prime Minister in the meeting decided that he will take the masses into confidence for one time only about the raise in tariff once NEPRA formally determines the new base tariff.” The official said that Nepra has been conveyed to announce the new base tariff by mid-January, 2021 that will be effective from January 1, 2021.

“Prime Minister will announce the raise in tariff likely in a phased manner and will not increase per unit price in one go.” However, the official said that with a raise in tariff by Rs3.30 per unit, the circular debt will tumble by 350 billion rupees in one year. The official said that the country has the existing base tariff based on 2017-18 and the government did not increase the base tariff in 2019-20.