First meeting of new year also approves off-grid gas sales and captive energy tax changes
Prime Minister Shehbaz Sharif chairs a federal cabinet meeting on January 1. Photo: Prime Minister’s Office
A new local government system will be introduced in Islamabad following the federal cabinet’s endorsement of decisions taken by the Cabinet Committee on Legislative Cases (CCLC), including actions under the Islamabad Capital Territory Local Government (Amendment) Ordinance, 2025.
Addressing the first federal cabinet meeting of the year on Thursday, Prime Minister Shehbaz Sharif congratulated cabinet members on the new year and stated that the privatization of Pakistan International Airlines marked significant progress in the government’s commitment to privatize state-owned enterprises.
Prime Minister Muhammad Shehbaz Sharif chairs a meeting of Federal Ministries on implementation of economic governance reforms.
(Islamabad: January 1, 2026) pic.twitter.com/OVVB29j16m
— Prime Minister’s Office (@PakPMO) January 1, 2026
The prime minister stressed that the privatization of state-owned enterprises is part of the government’s broader economic reform vision. He noted that the country’s GDP showed significant growth in the first quarter of the current fiscal year, terming it encouraging.
The cabinet endorsed the conclusions made by the Cabinet Committee on Legislative Cases in its December 30 decision, which included actions related to the Islamabad Capital Territory Local Government (Amendment) Ordinance.
The amendment bill, which received the nod from President Asif Ali Zardari on Friday morning, revises the compensation framework for acquired properties. According to the amendment, compensation will not be limited to cash payments and may also be awarded in the form of land or other prescribed arrangements. In cases of late payment, an additional 8% per year will be paid.
Read: President Zardari approves CDA 2025 amendment bill
The legislation also introduces provisions relating to persons with disabilities, minors and persons subject to legal restrictions, along with clauses aimed at safeguarding the rights of landowners.
The cabinet approved decisions of the Economic Coordination Committee (ECC) on August 26, which included measures to provide relief to electricity consumers under the Off-Grid Tax (Captive Power Plants) and develop a strategy for its implementation.
On the recommendation of the Petroleum Division, the cabinet also approved an action for issuance of a presidential order to amend the Off-Grid Taxation (Captive Power Plants) Act, 2025, allowing the sale of gas by third parties to off-grid captive power plants.
Prime Minister Shehbaz also spoke about his recent meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan, which he described as productive in terms of bilateral cooperation and mutual consultation.
Read more: PM Shehbaz meets UAE President at RYK
The Prime Minister met the President of the United Arab Emirates and the Ruler of Abu Dhabi at the Sheikh Zayed Palace in Rahim Yar Khan on Tuesday afternoon to discuss matters of mutual interest. The leaders continued discussions from their recent meeting in Islamabad on December 26, when Sheikh Mohamed made his first official visit to Pakistan as president of the United Arab Emirates. The two leaders discussed ways to enhance cooperation in areas including information technology, energy, mining and minerals, as well as defense.
Shehbaz also highlighted a telephone conversation with the Saudi Crown Prince and Prime Minister Mohammed bin Salman, highlighting discussions on strengthening economic and strategic ties between the two countries.
