- Pakistan reports the IMF mission about plans in conversations at the technical level.
- The Government organized RS1.2TR to reduce circular debt, said the IMF.
- Add the reference rate that will be implemented as of January 1, 2026.
The International Monetary Fund (IMF) has asked Pakistan to reduce entries in the considerable circular debt of the current fiscal year, The news He informed sources.
The inefficiencies of the energy distribution companies (DISC) have remained a significant factor, resulting in losses of RS265 billion in the 2000 fiscal year compared to RS276 billion in the 2014 fiscal year. In addition, under the recovery they were recorded in RS132 billion in fiscal year 2015, below RS315 billion in the fiscal year 2014.
The IMF has been informed about the reference rate, which will be implemented as of January 1, 2026.
The National Electric Power Regulation Authority will review the provisional rate of the eight discos by 2025-26, since energy companies requested RS455 billion in revenues. “If this translates into a unit per rate of rate, it can pass the increase of RS2 to 4% in the rate,” the sources said, and added that it would depend on the rate determined by the nepera.
Taking into account the losses incurred by energy distribution companies (disc), it is not possible to reduce losses to zero, but the IMF insists that the authorities reduce losses as much as possible, and the remaining losses will be financed through budget subsidies.
Pakistan and the IMF continued the conversations at a technical level here on Friday in which the highs of the Ministry of Energy reported the mission of the fund on the reference rate and the circular debt tickets for the current fiscal year.
The Pakistani authorities informed the IMF mission about a plan to eliminate shares in the next period of three to six years.
The circular debt stood at RS1,614 billion at the end of the FY2025, around RS780 billion lower than the FY2024. They noticed that the stock had been RS2.310 billion in the fiscal year2023. Subsidies for the electricity sector totaled RS1.225 billion in fiscal year 2015.
The Government organized RS1.2 billion with the help of banks to reduce circular debt to around RS400 billion. To address this bank exposure, consumers will pay a surcharge of up to RS3 per unit for five years.
The Government undertakes to keep the new entries under control during the current year. The conversations also covered the lien in the power plants, the passage of consumers and the relocation of rates. The IMF reported that the annual relocation of the rate will change to January 1 since fiscal year 2016, replacing the previous cycle of July 1.
Distribution companies will be required to review operational and financial needs and have proposals before each annual exception. The authorities said that the legal and regulatory framework of Nepra is being modified to support the new schedule, a change that the IMF had requested and the government has approved.
If analyzed six months from July to December 2024, it indicates the increase in the financial challenges facing the albums, with total operational losses of RS283.7 billion before accounting for government subsidies.
The main taxpayers are Quetta (RS92.65 billion), Peshawar (RS53.68 billion) and Hyderabad (RS39.63 billion, highlighting specific areas that need attention to stop these losses.
Even the discos that seemed profitable before the subsidies, such as fine, Faisalabad and Gujranwala, became losses once the subsidies were considered, incurring net losses of RS35.17 billion, RS13.12 billion and RS7.32 billion, respectively.
Lahore, Islamabad, Sukkur and tribal discos also showed marginal losses/did not remain profitable after the settings. Quetta Disco, in particular, recorded a loss of EBIT of RS60.36 billion, and with additional subsidies of RS32.30 billion, the general net loss remains significant.
When it was contacted, the former advisor to the Ministry of Finance, Dr. Khaqan Najeb, said that the current technical and commercial losses of approximately 20% highlight inefficiencies in billing, collection and transmission infrastructure, which causes persistent losses. The average losses of July 24-December were at approximately RS300 billion, which could be projected to around RS600 billion annually, which underlines the importance of the reforms.
The way to the future lies in the strengthening of governance, technological updates, possible privatization or concession models and rates updates.
The improvement of the liquidity and compensation of the CD is sometimes needed as the authorities have done in recent months, added Dr. Khaqan.
