Power tariff hike gets PM's nod to salvage IMF deal.

ISLAMABAD -- With only three days left to end differences, Prime Minister Shehbaz Sharif on Monday gave a go-ahead to increase electricity prices aimed at striking a deal with the International Monetary Fund (IMF), which may further push the annual base tariff up by about 33%.

The decision in principle was taken in a meeting held at the Prime Minister House after the IMF did not budge from its earlier stance that Pakistan will have to honour its past commitments. The premier chaired the meeting online, as he was in Lahore.

There might be on an average Rs7.74 per unit increase in the base tariffs but the surge for the upper consumption slabs will be much higher, according to the sources privy to the discussions.

The premier still wanted the Power Division to win back some of the space by convincing the IMF to agree to lower than the demanded increase.

After the PM's approval, the revised circular debt reduction plan will now be shared with the IMF on Tuesday (today), carrying the details of the increase in prices on account of quarterly and annual base tariff adjustments, said the sources.

Power Minister Khurram Dastgir did not comment on whether the PM agreed in principle to increase the prices with a maximum increase for the upper category of consumers.

The IMF is demanding about a 50% increase in prices but the government wanted to raise the prices in the range of 20% to 33%, according to the sources. The talks had begun on January 31st and the mission was in Islamabad till February 9th.

The IMF says that it is in Pakistan at the request of Prime Minister Shehbaz Sharif, expecting the government to implement all its outstanding actions, including an increase in taxes.

In case the IMF agrees to the measures that the government now stands ready to take, a meeting between Finance Minister Ishaq Dar and IMF Mission Chief Nathan Porter might take place the same day to give final shape to these measures.

Read 'Tough' IMF talks push rupee to Rs276.58

The sources said that the Power Division presented various options to the PM for increasing tariffs. These included a Rs4.26 per unit increase in quarterly tariffs and a Rs7.74 per unit average increase in the base tariff.

However, the IMF has demanded that the government should increase the electricity prices by over Rs12 per unit to completely offset the Rs675 billion demand for additional budget subsidy. The Power Division is of the view that it can still recover Rs43 billion with a lag from July...