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Cabinet approves power tariff hike, ends subsidies ahead of virtual IMF talks

ISLAMABAD: The federal cabinet on Sunday approved a plan to increase the power tariff and end subsidies ahead of virtual talks with the International Monetary Fund (IMF) starting today on the Memorandum of Economic and Financial Policies (MEFP).

The cabinet also okayed a revised circular debt management plan through circulation in this regard, The News reported Monday.

A team of the Washington-based lender concluded policy-level talks last week but the two sides could not strike a deal due to differences over fiscal measures that needed to be taken before the staff-level agreement.

According to the plan okayed by the cabinet yesterday, to be presented to the IMF, the government will jack up power prices by Rs7.91 per unit in four quarterly adjustments — February-March 2023, March-May 2023, June-August and September-November.

Under the plan, the government will charge Rs3.21 per unit from now onwards, Rs0.69 from March-May and increase it again by Rs1.64 per unit from June onwards to August of 2023. From September-November, the government will hike the power tariff by Rs1.98 per unit.

The consumer base tariff will be increased from Rs15.28 per unit in June 2022 to Rs23.39 per unit till June 2023.

The government also approved to end electricity subsidy of Rs65 billion given to exporters, with effect from March 2023.

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