Govt asked for proposal as IMF agrees electricity price cut

ISLAMABAD: The International Monetary Fund (IMF) has sought proposals from the government to stop power theft, reduce losses, and capacity charges.

The IMF has also sought proposals from Pakistan to explain the reasons for the reduction in the surplus budget targets of the provincial governments and to reduce line losses, as well as plans to stop power theft and reduce capacity charges.

The federal government has assured the International Monetary Fund (IMF) that it will eliminate the circular debt before the set target of six years.

The second-half economic review talks between Pakistan and the IMF are underway. The IMF mission was briefed on energy sector reforms by the Power Division officials.

The government team told the IMF that instead of the target of 1200 billion, the budget of the provinces remained in surplus of Rs921 billion, Punjab had a surplus of Rs348 billion, Sindh had a surplus of Rs283 billion, Khyber Pakhtunkhwa had a surplus of Rs176 billion, and Balochistan had a surplus of Rs114 billion.

The Khyber Pakhtunkhwa government will brief the IMF mission on September 29 and October 1.

The federal government has assured the IMF in the briefing to end the circular debt before the set target of 6 years.

The agreement will reduce the flow of circular debt, increase fiscal discipline, and investor confidence. The loan agreement will not impose any new burden on consumers.

Payments will be made with the already imposed surcharge of Rs 3.23 per unit. Losses have come down to Rs 397 billion compared to the estimate of Rs 635 billion.

The IMF was briefed on the progress in the privatization of three profitable DISCOs. The excess electricity will be used in the industrial sector and crypto mining.

The IMF demanded that reforms be made to improve the governance of DISCOs.

The IMF was informed of the plan to hand over management control of loss-making companies to the private sector.

The new loan agreement includes the restructuring of old loans worth Rs660 billion, and a new financing agreement of Rs565 billion is also part of the deal.