Pakistan Moves Annual Electricity Tariff Adjustment to January

The Pakistani government has decided to officially notify the International Monetary Fund (IMF) about its decision to reschedule the annual electricity tariff adjustment from July to January. This move is designed to help reduce the financial strain on consumers during the high-demand summer season.

This change is part of broader efforts to address growing public dissatisfaction with rising electricity costs, which have been worsened by concurrent tariff hikes and the high consumption levels during summer.

The Economic Coordination Committee (ECC) recently reviewed this proposal. The Finance Division informed the committee that discussions regarding this shift had taken place with the IMF during the negotiations for the Extended Fund Facility (EFF).

The ECC has directed the Power Division to formally communicate this decision to the IMF to ensure consistency with Pakistan’s international commitments.

Initially discussed informally with the IMF, this shift in timing has now been made official, according to government sources. The National Electric Power Regulatory Authority (NEPRA) has been instructed to update its tariff-setting procedures to reflect this change.

This new timeline means that the tariff revision will take effect every January 1, following the completion of the regulatory processes. This will coincide with lower electricity consumption during the winter, providing a smoother financial transition for consumers.

Under the current system, NEPRA determines electricity rates for distribution companies (DISCOs) and K-Electric based on the guidelines of the NEPRA Act of 1997 and its associated rules.

Historically, the tariff rebasing has occurred in July, which is also when electricity consumption peaks and Fuel Charges Adjustments (FCAs) are high. This has often resulted in sharp increases in electricity bills, sparking public protests.

By shifting the adjustment to January, the government aims to alleviate affordability concerns and smooth out electricity pricing year-round. NEPRA has expressed support for this plan, noting that it is in line with the National Electricity Plan’s Strategic Directive 8, which seeks to improve tariff setting and regulatory procedures.

The Power Division told the ECC that the existing process involves submitting tariff proposals by January 31, followed by public consultations, tariff determinations, and government notifications. Changing the timeline to January 1 ensures that any tariff increases align with the lower consumption period, making them easier for consumers to absorb.

Additionally, the government has approved a new tariff petition that reflects the new timeline, which is expected to come into effect on January 1, 2025. This shift is expected to reduce the financial burden on consumers and prevent the kind of public backlash that often accompanies summer tariff increases.