ECC Approves Power Sector Reform Package to Cut Electricity Costs and Control Circular Debt

The Economic Coordination Committee (ECC) of the Cabinet met at the Finance Division on Friday under the chairmanship of Federal Minister for Finance and Revenue, Muhammad Aurangzeb.

The ECC considered a proposal submitted by the Ministry of Energy (Power Division) regarding a comprehensive reform package aimed at reducing electricity generation costs, addressing legacy payment obligations, and easing pressures arising from circular debt in the power sector. It approved the reform package and related financial measures, noting that the initiative is expected to improve the sustainability of the power sector, reduce tariff pressures on consumers, and support broader sectoral reforms.

The committee was informed that the proposed measures are the outcome of negotiations with several power producers and are intended to rationalize tariff structures, streamline payment arrangements, and resolve outstanding financial liabilities through mutually agreed settlements.

The ECC approved a summary from the Petroleum Division seeking a TSG of Rs. 3 billion for gas supply schemes in villages located within a five-kilometer radius of gas production fields. The schemes will be implemented through Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL).

The ECC also approved a summary submitted by the Petroleum Division seeking a Technical Supplementary Grant (TSG) of Rs. 13.1 million to meet Pakistan’s annual contribution to the International Energy Forum (IEF). The committee was informed that continued membership in the IEF remains important for Pakistan’s participation in global energy dialogue and cooperation.

The committee further approved a summary submitted by the Ministry of Federal Education and Professional Training for a TSG of Rs. 200 million during FY 2025–26 to facilitate payment of outstanding dues to teachers of Basic Education Community Schools (BECS). The financial liability arises from court directives regarding payment of salary differentials in accordance with notified minimum wages for the period from August 2017 to June 2021.

The ECC also considered another summary from the same ministry seeking exemption from relending terms for an additional $4 million allocated to the Higher Education Commission (HEC) under the restructured Higher Education Development in Pakistan Project (HEDP). The committee was informed that the World Bank had reallocated these funds to the Investment Project Financing/Technical Assistance component, thereby increasing HEC’s share beyond the previously exempted $77 million.

The ECC further approved a summary submitted by the National Disaster Management Authority (NDMA) seeking a TSG of Rs. 3.63 billion to reimburse expenditures incurred during the Monsoon Response 2025 operations and overseas humanitarian assistance.

In addition, the committee approved a summary submitted by the Power Division seeking a TSG of Rs. 1.3 billion for the implementation of Sustainable Development Goals Achievement Program (SAP) schemes during FY 2025–26.

Separately, the committee considered a summary submitted by the Ministry of Information and Broadcasting seeking a TSG of Rs. 2.231 billion to clear outstanding liabilities related to federal public information and awareness campaigns. The ECC approved the grant to the extent of Rs. 1.47 billion and directed the ministry to present the remaining requirement in the next quarter.

The meeting was attended by Federal Minister for Petroleum Ali Pervaiz Malik, Federal Minister for Commerce Jam Kamal Khan, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, Federal Minister for Investment Qaiser Ahmed Sheikh (virtually), Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan, along with federal secretaries and senior officials from the relevant ministries, divisions, and regulatory bodies.