Pakistan power tariff hike plan agreed with IMF under $7bn programme
Pakistan has confirmed its power tariff hike plan with the International Monetary Fund. This move supports a $7 billion programme. The government will also cap power subsidies at Rs830 billion. As a result, it aims to stabilise the energy sector.
Timely Tariff Changes and Subsidy Cap
Officials plan to apply tariff changes on time. Therefore, they want to recover costs and avoid losses. The new baseline tariff will start on January 15, 2027. In addition, this step aligns with IMF conditions under the Extended Fund Facility. Leaders believe these actions will reduce pressure on public finances. However, they must manage the impact on consumers carefully.
Focus on Circular Debt Reduction
The government wants to control circular debt in the power sector. For example, it targets a flow of Rs300 billion. Authorities aim to bring this figure to zero by FY31. As a result, they expect stronger financial discipline. They will also apply net billing rules for new solar users. This step helps balance demand between solar and grid systems.
Reforms and Privatisation Efforts
Pakistan continues work on power sector reforms. However, delays have slowed privatisation of key companies. Entities like Iesco, Gepco, and Fesco may now be privatised by early 2027. Meanwhile, officials are reviewing Gencos such as Nandipur and Guddu. The government also plans private sector participation in Discos. This move can improve efficiency and governance.
Future Energy Planning and Investments
Authorities are preparing an Integrated Energy Plan by April 2027. This plan will guide future supply and demand decisions. In addition, the government will launch a Circular Debt Management Plan by July 2026. This ensures balanced tariff adjustments across users.
The power system will also see upgrades. For example, new leadership roles and market reforms are underway. Officials will hold the first 200MW wheeling auction by June 2026. As a result, competition in the energy market may increase.
