The government has adhered to a new set of energy sector reforms under its agreement with the International Monetary Fund (IMF), including routine tariff adjustments, stopping new benefits, and transferring circular debt shares to the CPA-G. These measures aim to stabilize the sector and ensure debt sustainability.
According to a report issued by the business registrar, these obligations, which were completed during the International Monetary Fund consultations between February 24 and March 14, 2025, include getting rid of the flow of clear circular debt by the end of the 25th year and maintaining this goal in the 26th fiscal year.
The government is also planning to maintain the tariff for electricity and reflective gas, and it contains financial risks, and the shield of weak consumers through the targeted support. Improvements in the recovery and financing costs already reduced 450 billion rupees of savings in the first half of the fiscal year 25.
Circular debts in the energy sector reached 2.44 trillion rupees in January 2025, while the debts of the gas sector reached 2.29 trillion rupees by June 2024. To reduce the debts of the energy sector, Islamabad agreed to transfer the current RS2.4 trillion shares to CPPA-G. This will include the cleansing of 348 billion rupees through the re -negotiated arrears with the IPPS, 387 billion rupees through the benefits that are given, and 254 billion rupees using the budget subsidies.
Another 1.25 trillion rupee will be raised through bank borrowing to pay the limited loans and arrears of the producers, with funding from the DSS service fee to be modified annually. It is expected that the DSS cover removal legislation by June 2025.
The government also committed to maintaining quarterly tariff adjustments and monthly fuel cost changes under the supervision of Nepra. The new annual tariffs will begin in July 2025. The provinces agreed not to issue any new subsidies for power or gas.
In the 26th fiscal year budget, the energy sector will be less than the fiscal year 25 due to the transfer of CD shares and early costs to reduce costs. However, a temporary scale for electricity relief will be offered by 1.7 rupees per unit from March 17, 2025, through 10 rupees per liter of tax development. This procedure, which was appointed to become by June 2026, will be applied to all non -written consumers and costs 182 billion rupees annually.
An additional financing will be used from the imposition of a new tax on captive power plant users to reduce network electricity prices by an estimated 0.90 rupees per unit in the beginning. The total support package, crowned 0.8 % of GDP, will cover FATA and Ke arrivals, support for agricultural tube, and other energy sector obligations.
The authorities stated that they will continue structural reforms by the cost side with the support of the World Bank, the Asian Development Bank and other partners to ensure the sector’s long -term sustainability.
