The Pakistani government has decided to formally notify the International Monetary Fund of its plan to change annual electricity tariffs from July to January, a move aimed at easing financial pressures on consumers during the peak summer months.
The amendment comes as part of broader efforts to address public dissatisfaction over rising electricity costs, which has been exacerbated by concurrent increases in tariffs and higher consumption during the summer.
The Economic Coordination Committee (ECC) recently discussed this proposal. The Finance Division informed the Forum that the IMF had been consulted on the plan during the Extended Fund Facility negotiations.
The ECC has directed the Energy Department to formally report the details to the IMF to ensure its compliance with international commitments.
The proposed timeline review, which was previously discussed informally with the IMF, has now been formalized, government sources confirmed. Policy guidelines have been issued to the National Electric Power Regulatory Authority (NEPRA), directing it to review the tariff setting framework.
This shift will allow tariffs to be redefined from January 1 of each year after regulatory procedures are completed, in line with lower electricity demand in the winter months and providing a smoother financial transition for consumers.
Under current practices, NEPRA sets consumer tariffs for electricity distribution companies (DISCOs) and K-Electric, based on the guidelines set out in the NEPRA Act of 1997 and related rules.
Historically, tariff resets have been implemented in July, coinciding with peak summer consumption and the rise in fuel duty adjustments (FCAs). This has often led to significant increases in electricity bills, sparking widespread public protests.
By changing the timing to January, the government seeks to alleviate affordability challenges and balance electricity prices throughout the year. NEPRA expressed its support for this proposal, noting that it is in line with the National Electricity Plan’s Strategic Directive 8, which calls for improved consumer tariff methodology and regulatory processes.
The Energy Department briefed the ECC that the current process involves submitting tariff returns by January 31, followed by public hearings, tariff determination and notifications to the government. Adjusting the timetable until January 1 ensures that any tariff increases coincide with shorter periods of consumption, making the changes more manageable for consumers.
In parallel, the government approved a new tariff petition reflecting the timing adjustment, which will come into effect from January 1, 2025. This adjustment is expected to ease the financial burden on consumers and prevent the public backlash that is often observed during the summer months.