The Government of Pakistan has decided to cap power sector subsidies at Rs830 billion in the upcoming federal budget, aligning with commitments made to the International Monetary Fund (IMF). This move is part of broader economic reforms aimed at stabilizing the country’s financial outlook.
According to official sources, Pakistan has assured the IMF that electricity tariffs will be increased in a timely manner to offset the impact of global energy market disruptions, particularly following recent geopolitical tensions in the Gulf region.
The agreement falls under the $7 billion Extended Fund Facility (EFF), which requires Pakistan to implement structural benchmarks. One key condition includes the introduction of a new base electricity tariff, expected to take effect from January 15, 2027.
Despite these reforms, the privatization of major electricity distribution companies, including IESCO, GEPCO, and FESCO, has once again been delayed. Authorities now anticipate completing the privatization process by early 2027.
Energy experts believe that while these measures may help reduce fiscal pressure, rising electricity costs could further burden consumers already facing inflationary challenges. The government is expected to balance reform goals with public relief measures in the coming months.
