The federal government has submitted a comprehensive plan to the International Monetary Fund (IMF) aimed at reducing electricity prices by Rs6 per unit.

This proposal is part of the government’s ongoing efforts to provide relief to consumers burdened by high electricity costs.

According to sources within the Power Division, the plan involves the federal and provincial governments jointly arranging funding of Rs2,800 billion. Of this amount, the federal government will contribute Rs1,400 billion, while the remaining Rs1,400 billion will be sourced from the four provincial governments through the National Finance Commission (NFC) Award.

Breaking down the provincial contributions, Punjab is expected to pay Rs699 billion, Sindh Rs351 billion, Khyber Pakhtunkhwa Rs231 billion, and Balochistan Rs119 billion. These funds will be used primarily to shut down inefficient power plants, settle outstanding contracts with independent power producers (IPPs), and repay local loans for certain power plants.

Media reports said contracts with the IPPs will either be terminated or their conditions relaxed using the funds.

The plan also includes measures to reduce the profits of government-owned power plants, which could lead to a reduction in electricity prices by Rs1.15 per unit. Additionally, by addressing the Rs2,300 billion circular debt, electricity prices are expected to decrease by another Rs2.83 per unit.

The federal government is currently awaiting approval from the IMF to proceed with the implementation of this plan, which promises significant relief to consumers by lowering electricity costs across the country. The initiative also includes the possibility of terminating or renegotiating contracts with certain IPPs, which could further contribute to lowering electricity prices.

The International Monetary Fund (IMF) has called upon Pakistan to revisit the National Finance Commission (NFC) award with the provinces.

This demand came during the second day of talks between Pakistani officials and the IMF under the second review of the $3 billion standby arrangement (SBA).

Article 160 of the Constitution authorizes the president to approve the distribution of revenues between the federation and the provinces through order of the NFC Award.

The newly formed government informed the IMF delegation that the provincial shares could not be reduced without a constitutional amendment and made all the provinces agree to a new formula.

The 2010 NFC award had been agreed for five years but since then there has not been any consensus to revisit it.

The international lender also sought a plan for Pakistan International Airlines and other government entities privatization.

During the talks the IMF delegation raised concerns on the performance of the energy sector, the sources within the ministry revealed.

The delegation was also briefed on the domestic financing, government guarantees and the expenses of the health and education sectors during the meeting.

A nod from the IMF would unlock the $1.1 billion loan tranche for Pakistan.