IMF rejects Pakistan's proposed electricity tariff cuts

The International Monetary Fund (IMF) has rejected a government plan to cut electricity tariffs in Pakistan for the time being. The issue is part of ongoing discussions regarding a $7 billion funding agreement. The Prime Minister had earlier hinted at an announcement to reduce electricity rates by 8 rupees per unit during a recent speech, but this did not happen. Instead, the Prime Minister led a meeting with key ministers to address problems in the power sector. The government had proposed a strategy to ease electricity costs, relying on changes in oil prices to help finance the cuts. However, the IMF needs to approve any tariff relief package first, and officials say the package lacked necessary details. During recent talks with the IMF, a smaller reduction of 2 rupees per unit was suggested, but the fund has expressed concerns about the overall economic impact. The government is considering increasing taxes on petroleum products to help fund the electricity reductions. Some officials believe that a cut of around 5 rupees per unit might eventually be possible if the necessary data can be presented. The National Electric Power Regulatory Authority (Nepra) is also reviewing several tariff petitions, and the government is facing criticism over changes to its solar energy policies. During a recent meeting, the Prime Minister emphasized the government's commitment to renewable energy. He instructed officials to clarify any confusion surrounding solar policies and to expedite the ongoing privatization process in the energy sector. A formal relief package for electricity consumers is still being prepared and will be announced soon.