Govt Assures IMF Electricity And Gas Prices Will Keep Rising in Pakistan

Pakistan has assured the International Monetary Fund (IMF) that it will continue passing the full impact of global energy prices on to consumers through regular electricity and gas tariff adjustments, while protected consumers will remain exempt from the increases.

The assurance was given during ongoing budget negotiations between Pakistan and the IMF, where officials briefed the Fund on energy sector reforms, circular debt management, and fiscal targets linked to the next phase of the bailout program.

Electricity and gas tariffs will be increased for all consumers except protected categories. The government also committed to maintaining quarterly electricity tariff adjustments and monthly fuel charges adjustments without delays.

The IMF was informed that Pakistan would continue implementing a full cost recovery model under which fluctuations in global oil and energy prices are directly reflected in domestic petrol, electricity, and gas prices.

The government has set a ceiling of Rs. 830 billion for electricity subsidies in FY27, equivalent to around 0.6 percent of GDP.

Subsidies will cover support for distribution companies, K Electric, FATA-related arrears, agricultural tube wells, and circular debt-related obligations.

The government further assured the IMF that the increase in the basic electricity tariff scheduled from January 2027 would be fully implemented as part of the reform program.

During the briefing, authorities also shared progress on resolving disputes and penalty payments involving Independent Power Producers. Officials said agreements related to arrears and penalties with IPPs are expected to be finalized by June 2026.

Pakistan also informed the IMF that audited data on gas sector circular debt have been compiled and that gas circular debt figures will now be publicly disclosed every quarter, similar to the power sector.

The government has additionally set a target to limit the annual increase in circular debt to Rs. 300 billion during FY2027.

Officials also briefed the IMF on efforts to privatize major power distribution companies, including IESCO, GEPCO, and Faisalabad Electric Supply Company, by early 2027.