The National Electric Power Regulatory Authority (NEPRA) on Thursday approved an increase in power tariff by Rs0.80 per unit under the fuel adjustment mechanism for the month of February. 

According to details, the NEPRA approved the tariff in Islamabad following the recent hike in fuel charges. It is reported that the cost of electricity production has been raised by Rs3 billion due to increase in gas prices.

Besides, in the month of February, 22.7 percent of the power was generated by water resources.

The hike in power tariff will put an additional burden of Rs5 billion on consumers, however lifeline, K-electric and agricultural consumers have been excluded from being charged.

The power tariff hike comes days after the prices of petrol and high speed diesel were increased by Rs6 per litre.

Inflation rose to 9.41 percent year-on-year, up from 8.21 percent in February, Bureau of Statistics data showed on Monday, lifted by sharp rises in food, fuel and transport costs that have squeezed household budgets.

The Asian Development Bank has predicted that Pakistan’s economic growth is likely decelerate to 3.9% as “macroeconomic challenges continue and despite steps to tighten fiscal and monetary policies to rein in high and unsustainable twin deficits.”

“For FY2018, ended 30 June 2018, the estimated GDP growth rate [was] revised downward from earlier 5.8% to 5.2%. Growth therefore slowed from 5.4% a year earlier. The growth decelerated despite revived agriculture. The expansionary fiscal policy markedly widened the budget and current account deficits and drained foreign exchange,” the ADB report observed.

“Until macroeconomic imbalances are alleviated, the outlook is for slower growth, higher inflation, pressure on the currency, and heavy external financing needed to maintain even a minimal cushion of foreign exchange reserves. Recurrent crises in the balance of payments require that firms become more export competitive,” it added.

The ADB report said inflation is expected to rise sharply to average 7.5% in FY2019, driven up by continued heavy government borrowing from the central bank, hikes to domestic gas and electricity tariffs, further increases in regulatory duties on luxury imports, and the lagged impact of currency depreciation by more than 10.7% since July 2018.