The International Monetary Fund increased the economic difficulties of Pakistan as it rejected the cash-strapped country’s proposal for any tariff adjustment or provision of additional subsidy, Geo News reported.

Pakistan has requested that upcoming quarterly tariff adjustments (QTAs) and Fuel Price Adjustments (FPAs) of (PKR) 7.50 per unit be staggered over the next four to six months in response to the IMF's serious objections to the government's proposal to provide relief to the poor against exorbitant power bills, Geo News reported citing The News International report.

“However, Pakistan has requested the IMF for staggering of QTA and FPA over a period of four to six months so it may also require some additional cost on which both sides will have to agree upon,” top official sources confirmed while talking to The News.

According to the sources, the electricity sector's troubles have persisted despite QTA's mandate to raise rates by (PKR) 5 per unit in the current month and FPAs by (PKR) 2.72 per unit. There will be an overall rate increase of more than (PKR) 7 per unit. According to Geo News, which cited The News, the QTAs will be determined using losses from the April to June period brought on by lower unit consumption, cost-escalation of interest payments, and exchange rate changes.

Earlier in July, amid the economic crisis in the country, Pakistan increased the electricity base rate by Pakistani Rupees (PKR) 7.5 per unit.

The National Electric Power Regulatory Authority (NEPRA) on July 14 allowed the federal government an increase of PKR 4.96/unit in base electricity tariff, as per ARY News.

Additionally, the caretaker government in Pakistan has already asked the power regulator to begin collecting an additional PKR 5.40 per unit quarterly rate adjustment over six winter months starting in October rather than three months as is now allowed, according to Dawn.

The main reason behind the current power tariff is current depreciation, accounting for almost 70 percent and the government had no option at its disposal at present to control, considering the IMF programme. Additionally, the fund plan limits the government and SBP's options, and an increase of 10–12% is expected as a result of interest rates.

The government decided to approach the IMF recently after widespread protests in Pakistan over inflated electricity bills and rising petroleum prices that have further increased the cost of living in the country.

The protests broke out after the government decided to remove power subsidies and increase electricity tariffs in July to meet a major IMF condition for the approval of a $3 billion short-term bailout facility.

Image source: ANI