ISLAMABAD: The government has abandoned its proposal to rebase electricity tariffs from January 1 each year instead of the existing July 1 schedule, following the International Monetary Fund's (IMF) refusal to endorse the move, according to informed sources.

On January 17, 2025, the Economic Coordination Committee (ECC) had initially approved a Power Division plan designed to shift financial adjustments to winter months when electricity consumption and bills are generally lower. The intent was to ease the burden on consumers during the summer when energy usage surges.

Although the Finance Ministry had no objections to the proposal-considering that it had no direct financial or subsidy implications-it suggested that the Power Division consult international development partners, including the IMF, World Bank, and Asian Development Bank (ADB), before moving forward. The Power Division explained in its summary that the National Electric Power Regulatory Authority (NEPRA) is responsible for determining consumer-end tariffs for distribution companies (Discos) and K-Electric. The federal government most recently notified the uniform tariff through an official directive in July 2024. Under existing regulations, Discos must submit their tariff determination filings by January 31 each year. This submission initiates a review process involving internal assessments, public hearings, final tariff determinations, and government notifications. Historically, annual tariff revisions have been implemented in July, coinciding with high Fuel Charges Adjustments (FCAs).

The Power Division acknowledged in its proposal that this simultaneous price increase-occurring in peak summer months when electricity usage is highest-leads to inflated consumer bills, widespread dissatisfaction, and nationwide protests. Officials believed shifting the annual rebasing to January would help maintain price stability and distribute the financial impact more evenly throughout the year. Despite the rationale presented by the Power Division, international lenders, particularly the IMF, did not support the initiative. They advised the government to focus on ongoing structural reforms and addressing existing inefficiencies in the power sector instead of introducing procedural changes. Following this response, the government decided to shelve the proposal, and no formal policy directives were issued to NEPRA.

As a result, the current tariff rebasing mechanism will remain in effect, with adjustments continuing to take place from July each year. The decision underscores the ongoing influence of international financial institutions on Pakistan's economic policies, particularly in the energy sector, which remains a key area of reform.