May 13, 2024 (MLN): Pakistan’s power sector circular debt valued at Rs2.6 trillion (2.5% of GDP), has remained broadly flat since October 2023 after some slippage earlier in the fiscal year, the International Monetary Fund (IMF) highlighted in its second and final review report.
The Fund has stated that the gap was attributed to lower-than-expected recoveries following the large annual tariff rebasing in July 2023.
Regarding the overall circular debt (CD) stock (power + gas sector), it commended that it stabilized in late 2023 and early 2024, secured by continued efforts to bring energy tariffs in line with costs and, in the power sector, continued anti-theft measures.
In the gas sector, Pakistan implemented another significant (24% on average) gas tariff increase on February 15.
It is imported to mention that on the referred date, the gas prices were hiked by another 67% for residential consumers, and up to 700% for fertilizer plants.
The change maintained a progressive rate structure to protect vulnerable residential consumers; significantly increased and equalized prices for fertilizer companies in the system; and modestly increased prices for captive power and some industrial users.
