In a recent development, the government has announced a plan to raise electricity prices by Rs. 4.37 per unit in the next four months. The objective behind this move is to generate an additional Rs. 122 billion from consumers during this period. This decision comes as part of the government’s efforts to address financial challenges in the energy sector.
According to official sources, the proposed increase in electricity prices will result in consumers bearing a total burden of Rs. 721 billion throughout the current fiscal year. Additionally, circular debt is expected to rise by Rs. 39.2 billion, which will be managed through budget subsidies.
The government aims to utilize the revenue generated from this price hike to maintain the circulating debt at its current level of Rs. 2.31 trillion. This approach is deemed necessary to curb losses due to factors like power theft, which had resulted in a significant additional loss of Rs. 236 billion in the previous fiscal year.
This plan aligns with a revised circular debt management strategy, which has been shared with the IMF. The proposed increase is attributed to a quarterly adjustment from the previous fiscal year, with the collection period spanning from September to December 2023.
It’s important to note that the increase in electricity rates is part of a routine action to manage the country’s circulating debt, with an additional Rs. 1.37 trillion being added to the debt as part of this plan.
Key Highlights:Government unveils plan to raise electricity prices by Rs. 4.37 per unit over four months.Aim is to generate an extra Rs. 122 billion in revenue during this period.Consumers to bear a total burden of Rs. 721 billion in the current fiscal year.Circular debt expected to rise by Rs. 39.2 billion, managed through budget subsidies.Goal is to maintain circulating debt at Rs. 2.31 trillion to counter losses.Revised circular debt management strategy shared with IMF.Increase in electricity rates attributed to quarterly adjustment from previous fiscal year.Routine action includes adding Rs. 1.37 trillion to the country’s circulating debt.