- Pakistan panties IMF mission on plans in technical level conversations.
- Govt arranged RS1.2TR to reduce circular debt, the IMF told.
- Adds baseline -tariff to be implemented from 1 January 2026.
The International Monetary Fund (IMF) has asked Pakistan to reduce influx to the significant circular debt to zero from the current fiscal year, The news Reported quotes sources.
The inefficiency of the power distribution companies (discos) has continued to be a significant factor, resulting in losses of RS265 billion in FY25 compared to RS276 billion in FY24. In addition, during recovery was registered for RS132 billion in FY25, down from RS315 billion in FY24.
The IMF has been informed of the baseline tariff, which will be implemented from January 1, 2026.
The National Electric Power Regulatory Authority will review the Temporary Customs of the Eight Discoos for 2025-26, as power companies requested RS455 billion in revenue. “If it translates this into an increase per unit in the tariff, it can hover around RS2 to 4% increase in customs,” the sources said, adding that it depends on the customs determined by NEPRA.
By seeing the losses incurred by the power distribution companies (discos), it is not possible to reduce losses to zero, but the IMF insists on the authorities to reduce the losses as much as possible and the remaining losses to be financed through the budget subsidies.
Pakistan and the IMF continued conversations at the technical level here on Friday, with the Power Ministry-High-up oriented the fund mission on the baseline tariff and the circular debt inflow for the current financial year.
Pakistani authorities informed the IMF mission of a plan to eliminate the stock over the next three to six years.
The circular debt amounted to RS1.614 trillion at the end of FY2025, approx. RS780 billion lower than FY2024. They noted that the stock had been RS2,310 trillion in FY2023. Grants for the electricity sector amounted to RS1,225 trillion in FY2025.
The government arranged RS1.2 trillion using banks to reduce circular debt to around RS400 billion. To serve this bank exposure, consumers pay a supplement of up to RS3 per year. Unit for five years.
The government is obliged to keep fresh influx in check during the current year. The negotiations also covered the tax on captivity works, consumer undergoes and customs. The IMF was informed that the annual tariff base will change to January 1 from FY2026 and replace the previous 1st July cycle.
Distribution companies will be obliged to review operational and financial needs and submit proposals prior to each annual baking. Officials said that Nepra’s legal and regulatory framework is changed to support the new schedule, a change that the IMF had asked for and the government has approved.
If it was analyzed six months from July to December 2024, the rising financial challenges that discos are facing indicates with the total core operating losses reaching RS283.7 billion before explaining state aid.
The largest contributors are Quetta (RS92.65 billion), Peshawar (RS53.68 billion) and Hyderabad (RS39.63 billion, highlighting specific areas that need attention to limit these losses.
Even discos that seemed profitable before subsidies, such as Multan, Faisalabad and Gujranwala, were loss -making when subsidies were considered, which suffered net losses of RS35.17 billion, RS13.12 billion and RS7,32 billion respectively.
Lahore, Islamabad, Sukkur and Tribal Discos also showed marginal losses/failed to remain profitable postal adjustments. In particular, Quetta -Disco recorded an EBIT loss of RS60.36 billion, and with additional subsidies of RS32.30 billion, the total net loss remains significant.
When it was contacted, the former adviser to the Ministry of Finance said Dr. Khaqan Najeb that the ongoing technical and commercial losses of approx. 20% highlight inefficiency in invoicing, collection and transmission infrastructure, causing persistent losses. The average losses in July-December amounted to approx. RS300 billion, which could project to around RS600 billion annually, emphasizing the importance of reforms.
The road ahead lies in strengthening management, technology upgrades, potential privatization or concession models and customs updates.
The improvement of liquidity and clearing backlog on CD is sometimes necessary, as the authorities have been done in recent months, Dr. Khaqan.
