Concerned about Pakistan’s energy sector.. Increased electricity tariff and fuel tax

Pakistan’s energy sector is launching a new fiscal year by adding more burdens to consumers, as crises seem likely to continue on the sector, to meet government commitments on the terms of the IMF loan.

The government of Islamabad plans to implement a package of measures that will revive the state’s coffers and boost its revenues, including raising the electricity tariff in the second step of the current government, as supply unit prices have already increased in July 2022.

Pakistan’s energy sector volatility was not limited to raising electricity prices, but the additional charges extended to fuel and petroleum derivatives of all kinds, despite increased demand for gasoline following the lack of compressed natural gas, according to the specialized power platform.

The imposition of additional restrictions on Pakistan’s energy sector was the most prominent requirement to meet the terms of the IMF loan, and the government raised the electricity tariff during the current fiscal year (2023-2024) by Rs 4.96, jumping from Rs 24.82/unit to Rs 29.78/unit.

The new increase would add to the consumer burden of an estimated Rs 3.281 billion during the current fiscal year. NEBRA explained that the new electricity tariff is higher than the predetermined average of Rs 24.82 per kilowatt-hour, and estimated the price of additional units at Rs 3/unit.

The second blow to Pakistan’s energy sector was the introduction of an additional tax on oil derivatives prices, leading to higher fuel prices despite global oil price declines.

Pakistan’s government is moving to introduce a new tax and duties on refined products starting July 16, 2023, with the aim of raising more revenue, according to local newspapers.