ISLAMABAD: The parleys between International Monetary Fund (IMF) and Power Division on new Circular Debt Management Plan (CDMP) are reportedly not heading towards any conclusion due to impasse on increase in electricity tariff, well informed sources told Business Recorder.
Pakistan had pledged in the fifth review to increase tariffs by Rs1.39 per unit from June 1, 2021 as the second phase of Nepra’s determined tariff of Rs 2.34 per unit, of which Rs 1.95 per unit hike has already been implemented.
The country’s circular debt reached Rs2.234 trillion as of July 21 – from Rs2.208billion in July 20. However, another disturbing fact is that recovery has declined in FY2020-21 as compared to FY 2019-20.
“Power Division’s team is negotiating with IMF on CDMP 2021 and when it is finalised it would be known how much more increase in tariff has been agreed,” the sources continued. The current talks between Pakistan and IMF, if successful, would set the path for disbursement of $750 million SDRs.
The sources said Minister for Energy Hammad Azhar, Minister for Planning Asad Umar and Finance Minister Shaukat Tarin have already finalised government’s strategy on the issue of tariff increase. Prime Minister Imran Khan and Finance Minister, Shaukat Tarin have already made it clear that the government would not increase the base tariff as industrial, commercial and domestic consumers could not bear the brunt.
In the previous CDMP, the government had pledged to IMF that it would increase tariff by Rs 5 per unit by 2022.
The source said, IMF is also pressing the government to reduce the level of subsidy to domestic and agriculture consumers.