IMF seeks details on operation, cost, targeting, protections against fraud and abuse, and offsetting measures.
Govt, a day earlier, had announced subsidy help inflation-hit masses.
IMF says Islamabad has made “substantial progress” on policy commitments.
The International Monetary Fund (IMF) said that the Pakistani government did not consult the global lender on its petrol subsidy for low-income groups, reported Bloomberg on Tuesday.
Esther Perez, the IMF’s resident representative for Pakistan, told the publication that the lender was not consulted on the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people.
“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” said Perez.
‘This is not subsidy’
A day earlier, Minister of State for Petroleum Musadik Malik announced that the federal government in order to cushion the effect of high petrol prices on inflation-hit masses decided to subsidise petrol up to Rs100 for motorcyclists and owners of vehicles up to 800cc.
“Prime Minister Shehbaz Sharif has directed to provide subsidy on petrol to low-income people up to Rs100 per litre,” Malik told journalists in Lahore.
Earlier, it was decided to provide a subsidy of Rs50 per litre.
The minister said under a comprehensive strategy, subsidised petrol will be available to motorcyclists and owners of vehicles up to 800cc.
Malik further said owners of vehicles above 800cc would be charged full price.
He said the decision to provide fuel at subsidised rates will be implemented within six weeks, adding that the government will make petrol cheaper for the poor.
“The owners of big vehicles will pay more for petrol. The rich will pay Rs100 more for petrol while the poor will pay Rs100 less. 210 million people are poor in a population of 220 million, we stand with poor Pakistan.”
He said that the decision on the gas tariff has been implemented from January 1. “We have separate tariffs for the poor and the rich.”
Pakistan has made ‘substantial progress’: IMF
On the staff level agreement, the IMF said that Islamabad has made “substantial progress” in meeting the policy commitments required to unlock billions of dollars in loans.
“A staff-level agreement will follow once the few remaining points are closed,” said Perez told Bloomberg.
“Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Last week, Finance Minister Ishaq Dar had said that the global lender wanted to see countries finalise commitments they have promised to help Pakistan shore up its funds before signing off on the bailout package. Pakistan needs to repay about $3 billion of debt by June, while $4 billion is expected to be rolled over.
Pakistan has taken tough measures including increasing taxes and energy prices, and allowing its currency to weaken to restart a $6.5 billion IMF loan package. The funds will offer some relief to a nation still reeling from last year’s devastating floods and help pull the economy out of a crisis ahead of elections this year.
A study found that rising electricity tariffs are increasingly moving beyond the affordability of the masses and adversely impacting their consumption patterns.
The study was conducted by the Institute of Policy Studies, Islamabad titled “Impact of Rising Electricity Prices on Consumer Behavior: The Case of Power Distribution Companies in Pakistan”.
The research study covered over 1,000 households and 140 shop owners in the top 10 cities of Pakistan.
The survey results indicate that most of the respondents have experienced moderate to significant increases in their electricity bills in recent months.
The study further highlights the correlation between the magnitude of the bill increase and the extent of consumption reduction, indicating that higher price hikes lead to more significant efforts in reducing electricity usage.
However, despite the overall reduction in electricity consumption, a significant portion of the survey participants reported no noticeable decrease in their bills.
It recommends the need for improved governance and regulatory measures in the energy sector along with affordable electricity tariffs and alternative payment options to accommodate different economic circumstances.
The study also stresses the importance of addressing issues such as load shedding and raising consumer awareness about peak hours when electricity costs are higher.
Moreover, it also found that the alarming trend also caused a sharp decline in the recoveries of distribution companies (DISCOs) which can lead to difficulties in paying for power purchases from the generation companies, maintaining distribution networks, and servicing debts.
These factors further hinder the ability of DISCOs to invest in infrastructure upgrades, provide quality services, and improve the overall reliability of electricity supply.
The research emphasises effective measures to address power affordability concerns and suggests strategies for distribution companies to mitigate the negative effects of rising prices.
Overall, the study provides valuable insights into the impact of rising electricity prices on consumer behaviour in Pakistan and offers recommendations for DISCOs and policymakers to address affordability concerns and ensure a sustainable balance between electricity prices and consumers’ ability to bear these costs.
With all the hype around Russian oil, the foremost question that every Pakistani has is what effect the imported oil will have on the high fuel prices.
Minister for Planning, Development and Special Initiatives Ahsan Iqbal answered the question in a recent interview with Voice of America (Urdu).
When asked whether the price of petrol — which had reached a record high of Rs282 per litre and currently stands at Rs272 per litre — would be slashed by Rs100 once Russian oil reached Pakistan, the minister responded in the negative.
“There might not be a significant difference,” he said. However, the price would “definitely reduce” once Pakistan started importing large quantities of Russian oil, he added.
“At the beginning, the quantity of imported oil is small, but as it increases in six months to a year, it will help reduce petrol prices,” Iqbal said.
Pakistan and Russia had been negotiating an oil deal for months before reaching an agreement in April.
The first shipment of Russian oil is expected to dock at the Karachi port in late May, State Minister for Petroleum Mussadik Malik had said last month. The country would seek to import 100,000 barrels per day (bpd) of Russian crude oil if the first transaction went smoothly, he had added.
Initially, the Pakistan Refinery Limited (PRL) would refine the crude oil in a trial run, to be followed later by Pak-Arab Refinery Limited (PARCO) and other refineries.
A day earlier, Malik shared that Pakistan plans to import one-third of the country’s total crude oil requirements from Russia.
The state minister revealed that the government has finalised a comprehensive energy security agreement with Russia, which would cover different aspects of the energy supply in the country.
Malik said: “We want to open an energy corridor with Central Asia like the one we have with Gulf countries.”
“This would reduce the cost of energy in the country and would be helpful in the development of industrial clusters and value additions in the agriculture sector,” he maintained.
The minister revealed that the government’s objective is to import 18-20% of its total crude oil imports from Russia, with the hope that this move will substantially lower petroleum product prices for domestic consumers.
The amount will be recovered from power consumers in May.
The adjustment will be shown separately in consumers’ bills.
Charges applicable on all categories except lifeline and EVCS.
ISLAMABAD: Power consumers, who are already overburdened by soaring inflation and high fuel and electricity costs, will now have to pay Re0.79 per unit more in the month of May.
According to a notification issued by the National Electric Power Regulatory Authority (Nepra) Thursday, the additional amount is being levied in lieu of fuel cost adjustment (FCA) charges for March.
The charges would be applicable to all consumer categories except electric vehicle charging stations (EVCS) and lifeline consumers, the notification stated.
“The said adjustment will be shown separately in the consumers’ bills on the basis of units billed to the consumers in the month of March 2023,” it added.
In March, Nepra allowed power distribution companies (Discos) and K-Electric to recover deferred fuel adjustment surcharges up to Rs14.24 per unit from consumers in eight months.
According to the Nepra decision, discos will recover Rs10.34 per unit from domestic protected consumers using 0-200 units per month, Rs14.24 per unit from non-protected consumers using 0-200 units, Rs14.24 per unit from those consuming 201-300 units per month, and Rs9.90 per unit from private agricultural consumers.
The entire amount would be recovered from the electricity consumers in monthly instalments from March to October 2023.
In its decision, the authority also allowed K-Electric to recover the deferred fuel adjustment surcharge from the consumers up to Rs 13.87 per unit.
K-Electric will recover Rs9.97/unit from domestic protected consumers using 0-200 units per month, Rs13.87 per unit from non-protected consumers using 0-200 units, Rs13.87 per unit from those consuming 201-300 units per month, and Rs9.90 per unit from private agricultural consumers. The private lender will also recover the amount from March to October 2023.