File photo of an earlier meeting of the Economic Coordination Committee, courtesy PID
The Economic Coordination Committee (ECC) on Wednesday approved the imposition of a Rs. 3.82 per unit surcharge on the power tariff from March to June 2023 as part of ongoing efforts to fulfill prior conditions of the International Monetary Fund (IMF) to revive a stalled bailout program.
According to local media, the IMF—despite the fulfillment of multiple prior conditions—has been “shifting goalposts,” exacting ever-greater concessions from cash-strapped Islamabad, which has no other viable options for financial support. Once a long-delayed staff level agreement has been exchanged, the IMF would release a $1 billion tranche under the ninth review of the Extended Fund Facility. At the same time, several other nations have also pledged to provide support once Pakistan is back in the IMF program.
The power surcharge approved by the ECC aims at generating an additional Rs. 335 billion in revenue over the next fiscal year. It calls for 43-paisa additional cost per unit to protected consumers, who use up to 200 units. This surcharge would increase to Rs. 3.23/unit for all other consumers throughout the next fiscal year, averaging out at Rs. 2.63/unit. This would also be applicable on consumers of K-Electric.
The ECC also approved a tariff increase of Rs. 1.56/unit for non-protected KE consumers with a recovery period of three months—March to May 2023—while also allowing them to be charged an additional average tariff of Rs. 3.21/unit for April and May.
Chaired by Finance Minister Ishaq Dar, the meeting also decided to place before the federal cabinet a proposal to double the electricity rates for commercial consumers after 8 p.m. in a bid to discourage markets to remain open after sunset and boost energy conservation.
Additionally, the ECC approved a summary of the National Food Security and Research Ministry to set wheat procurement price at Rs. 3,900/40kg. It also approved a Ramzan Relief Package to provide 19 subsidized items to the Utility Stores Corporation for Rs. 5 billion.
On a summary submitted by the Ministry of Maritime Affairs, the ECC approved the Karachi Port Trust’s board resolution regarding waiving off all the charges of storage on the stuck containers and cargo at Karachi Port subject to the condition that demurrages charges on each case beyond Rs5 million will be waived off after getting certification from the State Bank of Pakistan.
Considering a summary submitted by the Ministry of Maritime Affairs, the ECC approved a Karachi Port Trust Board resolution to waive all charges of storage on containers held up at the port due to the non-retirement of Letter of Credits and remittances. However, it was decided, if the demurrage charges go beyond Rs. 5 million, the KPT will seek certification from the State Bank of Pakistan prior to granting the waiver.