During the ongoing Pak-IMF talks in Dubai, Pakistan has agreed to increase the electricity tariff by 1.6 percent with retrospective effect from October 1, 2009. "We have decided to increase power rates by 1.6 percent immediately," an official said, adding that the Water and Power Ministry would issue a notification and would also sent a copy to Dubai in next two days. A Pakistani delegation led by Finance Minister Shaukat Tareen is holding talks with IMF authorities in Dubai.

IMF authorities were not satisfied with the implementation of power tariff increase agreement reached between the World Bank and the Asian Development Bank, arguing that under the agreement authorities were required to pass on to the consumers a six-percent increase from October 1.

The government raised the power tariff from the said date by 6 percent but excluded the tube wells and lifeline consumers using 50 units per month. Sources said the IMF had expressed concern that the energy sector in Pakistan still had high non-productive expenditures, while the issue of circular debt could not be resolved and the government did not even raise the tariff by 6 percent. A joint statement is expected after the talks on final day of first quarterly review meeting on November 12. Pakistan is seeking $1.2 billion tranche from the IMF, which includes $360 million additional facility in terms of standby arrangement, apart from the $840 million quarterly tranche from the IMF.