LAHORE: Pakistan is raising power prices by an average of 20% to bolster its chances of securing a new loan from the International Monetary Fund (IMF).

The National Electric Power Regulatory Authority will increase the power tariff by an average 5.72 rupees to 35.50 rupees per kilowatt-hour for Pakistan’s 10 power distribution companies for the next fiscal year starting from July 1, authority spokesman Sajid Akram said by phone.

Pakistan cut power tariffs for industries last Friday to help make exports competitive.

Prime Minister Shehbaz Sharif’s government raised taxes in its budget last week to boost revenue as it engages in talks with the IMF for more emergency funding.

The nation expects to secure a staff-level deal for a programme that will last minimum three years by July, according to Finance Minister Muhammad Aurangzeb.

“The power tariff hike is critical for securing the IMF programme, as it is a key part of stalling the ongoing rise in debt across the energy sector,” said Uzair Younus, a principal at The Asia Group’s South Asia Practice.

The arrangement is part of a multiyear tariff regime, and any change will be applicable after the regulator decides on the government’s requests for a uniformed tariff for the state-owned power distribution companies and K-Electric.

In February, Pakistani industrialists had warned that if energy prices were not slashed by approximately 43%, various industries may not survive, as high input costs would lead to the loss of export markets, and eventually trigger industrial closures, reports had stated.

Pakistani industrialists had said the international competitiveness of the country’s textiles and apparel exports was being continuously eroded by ever-increasing energy prices that, on average, were over twice than those of competing countries.

 - Bloomberg