ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to further raise electricity and gas tariffs to reduce the circular debt issue.
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 to ensure full cost recovery from consumers has been outlined to tackle the significant circular debt issue in the gas sector, which reached Rs2,083 billion as of January.
Additionally, commitments have been made to implement reforms aimed at reducing or maintaining the circular debt in the power sector for the fiscal year 2024-25.
The IMF has urged measures to curb electricity theft, enhance the transmission system, and initiate an annual rebasing of electricity tariffs.
Further demands include revising power purchase agreements and reforming subsidies for agricultural tube wells.
The government has assured the IMF of striving to meet the target of Rs2,300 billion circular debt in the power sector by June. To address inconsistencies in gas pricing, steps will be taken to ensure uniformity across regions and industries, minimizing disparities to improve operational efficiency.
Amidst these reforms, efforts will be made to protect vulnerable households from the impact of tariff adjustments, with measures in place to mitigate the effects on low-income families during the revision of electricity and gas tariffs.
