IMF Review to Focus on Energy Reforms and DISCO Privatisation

Pakistan and the IMF are set to hold discussions next week for the fourth economic review, with talks expected to centre on energy-sector reforms, privatisation and measures to address circular debt in the power and gas sectors.

 

The government is expected to brief the IMF on reforms to electricity and gas transmission systems, along with plans to expand private-sector participation in the energy sector. Changes to the basic electricity tariff are also likely to be discussed.

 

The government has finalised the tariff structure for the competitive electricity market, although the bidding process is yet to begin. Meanwhile, expressions of interest have been invited for the proposed privatisation of Islamabad, Faisalabad and Multan electricity distribution companies.

 

Both domestic and international investors have reportedly shown interest in acquiring the DISCOs. The government is targeting a reduction in the power sector’s circular debt to Rs1.614 trillion, while a revision in the basic electricity tariff is expected in January 2027.

 

For 2027, the government has proposed delivering electricity subsidies to eligible consumers through the Benazir Income Support Programme. At the same time, efforts to move toward full cost recovery and phase out cross-subsidies could result in higher electricity tariffs.