- Pakistan stimulates the Mission of the IMF on plans in talks at the technical level.
- Govt organized RS1.2TR to reduce the circular debt, said the IMF.
- Add basic rates to be implemented from January 1, 2026.
The International Monetary Fund (IMF) has asked Pakistan to reduce entry into the considerable circular debt to zero of the current financial year, The news reported by citing sources.
The ineffectiveness of electricity distribution companies (DISCO) continued to be a significant factor, resulting in losses of RS265 billion during the 2010 financial year against 276 billion rupees in 2000. In addition, under recovery was recorded at RS132 billion in fiscal year 25, compared to 315 billion rupees in the year 24.
The IMF has been informed of the reference rate, which will be implemented from January 1, 2026.
The National Electric Power Regulatory Authority will examine the interim rate of eight discos for 2025-2026 while electricity companies requested 455 billion income rupees. “If this translates it by a hike per unit in prices, it can hover around RS2 at 4% price,” said the sources, and added that it would depend on the price determined by the Nepra.
Keeping in sight the losses suffered by electricity distribution companies (DISCO), it is not possible to reduce the losses to zero, but the IMF insists on the authorities to reduce as much as possible the losses and losses to be financed through budgetary subsidies.
Friday, Pakistan and the IMF continued technical talks at the technical level during which the Ministry of Power High-Ups informed the mission of the fund on the reference rate and the circular debt inputs for the current exercise.
The Pakistani authorities informed the IMF mission on a plan to eliminate action during the three to six years.
The circular debt amounted to RS1.614 Billions at the end of the financial year2025, or approximately 780 billion redheads less than the financial year 20124. They noted that the stock was RS2.310 Billions during the 201023 financial year. The subsidies for the energy sector totaled 1.225 Billion of rupees in 2010.
The government organized 1.2 billion of rupees with the help of banks to reduce circular debt to around 400 billion rupees. To serve this exhibition to banks, consumers will pay a surcharge that can reach RS3 per unit for five years.
The government has committed to keeping new entries in check during the current year. The talks have also covered the levy on captivity power plants, the passage of consumers and the rebuilt prices. The IMF has been informed that the rebasing of the annual rate will go to January 1 for the 2010 financial year, replacing the previous cycle of July 1.
Distribution companies will have to examine operational and financial needs and submit proposals before each annual rebasage. The officials said that the NEPRA legal and regulatory framework was changed to support the new calendar, a change that the IMF had requested and that the government has approved.
If it is analyzed six months from July to December 2024, it indicates growing financial challenges faced by nightclubs, total operating losses reaching 283.7 billion rupees before taking government grants into account.
The main contributors are Quetta (92.65 billion rupees), Peshawar (53.68 billion rupees) and Hyderabad (39.63 billion rupees, highlighting specific domains requiring attention to braking these losses.
Even the discotheques which seemed profitable before the subsidies, such as Multan, Faisalabad and Gujranwala, have become losses once the subsidies have been taken into account, undergoing net loss of RS35.17 billion, respectively RS13.12 billion and 7.32 billion rupees.
Lahore, Islamabad, Sukkur and Tribal Discos have also shown marginal losses / failed to be profitable after adjustments. Quetta Disco, in particular, recorded a loss of ebit of 60.36 billion rupees, and with additional RS32.30 billion subsidies, the overall net loss remains significant.
When contacted, the former advisor to the Ministry of Finance, Dr. Khaqan Najeeb, said that the technical and commercial losses in the process of approximately 20% highlight the ineffectures in the billing, the collection and transmission of infrastructure, causing persistent losses. The average losses of July 24-December have been up to around 300 billion rupees, which could projection at around 600 billion rupees per year, stressing the importance of reforms.
The path to follow lies in strengthening governance, technological upgrades, potential privatization or concession models and price updates.
Improving the liquidity and compensation for the CD backwards is sometimes necessary as has been done by the authorities in recent months, added Dr. Khaqan.
