Pakistan assures IMF of hike in gas, electricity prices from June
The IMF has issued a warning about Pakistan's economic future, highlighting exceptionally high downside risks in its latest report

at 12:46 am
IMF and Pakistan
IMF and Pakistan

Islamabad, May 11: Cash-strapped Pakistan has assured the International Monetary Fund (IMF) that it will increase gas and electricity prices in the country, even as Islamabad is seeking another bailout package.

The International Monetary Fund (IMF) has demanded Pakistan further increase gas prices on a half-yearly basis starting in June, Samaa reported.

According to documents obtained, the government has assured the IMF of timely increases in electricity and gas tariffs as part of its agreement with the international financial institution.

A comprehensive plan for full cost recovery from consumers has been drafted to address the circular debt issue plaguing the gas sector, which stood at a staggering Rs2,083 billion as of January.

Furthermore, the government has committed to implementing reforms to reduce the circular debt or maintain stocks in the fiscal year 2024-25.

On the other hand, the circular debt in the power sector remained over Rs2,600 billion, while the IMF has also demanded measures to stop electricity theft and improve transmission system, as per the documents obtained. It has also asked for issuing a notification for the annual rebasing of the electricity tariff in fiscal year 2024-25.

The measures demanded further include revising power purchase agreements and reforms in subsidy for agricultural tube wells.

The IMF also insists on meeting the target of Rs2,300 billion circular debt in the power sector by June. In response to the IMF’s demand for a uniform gas price for cost recovery, the government has assured that steps will be taken to ensure consistency across regions and industries. Disparities in gas prices for different sectors will be minimized to streamline operations and enhance efficiency, Samaa said.

The circular debt in the gas sector was recorded at Rs2,083 billion by June. The IMF has also called for all fertilizer companies to charge the full price of gas, indicating a broader push for transparency and accountability in energy pricing.

In light of these proposals, the government has assured the IMF that the difference in gas prices for various regions and industries will be reduced. However, amidst these reforms, the government has emphasized the need to protect vulnerable households from the impact of tariff adjustments.

Measures will be put in place to safeguard the interests of low-income families during the implementation of electricity and gas tariff revisions.

This comes even as the IMF has issued a stark warning about Pakistan’s economic future, highlighting exceptionally high downside risks in its latest report.

The report, released ahead of talks between the Pakistani government and the IMF on a new long-term programme, underscores concerns about the country’s stability and the challenges it faces, Dawn reported.