Pakistan has assured the International Monetary Fund (IMF) of implementing timely electricity tariff adjustments and capping power subsidies at Rs830 billion in the upcoming budget to sustain energy sector viability amid global market shocks.

The new baseline tariff will be implemented from January 15, 2027, under the structural benchmark agreed with the IMF under the $7 billion Extended Fund Facility (EFF).

The privatisation of power distribution companies — including Iesco, Gepco and Fesco — has been delayed once again and is expected to be finalised by early 2027.

The government is working closely with the Privatisation Commission to assess the viability of privatising two targeted Gencos (Nandipur and Guddu).

The government is committed to the IMF to apply the recently adopted net billing regulation to new consumers to better balance solar and grid demand, in line with international practice. These steps will help prevent the recurrence of the monster of the circular debt.

“It has been anticipated that with allocated subsidy and the timely tariff adjustments, it will minimise Circular Debt (CD) flow target of Rs300 billion and remain committed to reducing gross CD flow to zero by FY31,” top official sources confirmed to The News here on Friday.

Pakistan, according to the official, assured the IMF of achieving energy sector viability to maintain macroeconomic stability.

For this purpose, the government shared with the IMF in writing for timely tariff increases that recover costs and the re-emergence of circular debt.

The execution of timely adjustments in tariffs is necessary in the context of recent shocks to global energy markets to ensure the sector’s viability and broader macroeconomic stability.

The government has established the Integrated Energy Plan (IEP) targeted for completion by April 2027 in a bid to make better-informed decisions on supply and demand across the energy sector value chain.

According to the government’s strategy, it is aimed at incorporating the CD Management Plan to be adopted by the cabinet by the end of July 2026.

This upcoming CDMP will ensure timely electricity tariff adjustments consistent with cost recovery that remain progressive, and increases are introduced, balanced across consumer categories.

This includes Nepra’s continued timely notifications of quarterly tariff adjustments (QTAs) and automatic monthly fuel charge adjustments (FCAs), as well as the full implementation of the January 2027 annual rebasing by January 15, 2027.

Following the implementation of the CD stock reduction operation in FY26 and recognising ongoing improvements in operational efficiency and performance, the FY27 budget will include a subsidy limited to Rs830 billion.

The subsidy will cover (i) the projected tariff differential for Discos and KE; (ii) current and arrears payments of Fata; (iii) agricultural tubewells; and (iv) CD stock payments to counterbalance anticipated CD flow, which continues to be targeted at a lower level following the CD stock operation.

The settlement with several IPPs, with whom penalty payments on arrears were to be waived as part of the broader CD stock reduction operation, remains incomplete, with CD continuing to accumulate as a result. The government will finalise arrangements with all IPPs by the end of June 2026.

The government will try to resolve a dispute with KE, currently under litigation, which has resulted in significant nonpayment and arrears by the end of December 2026.

The government will continue to move forward with its fundamental cost-reducing power sector reforms, including private sector participation in Disco management to improve performance, efficiency, and governance, and address power sector CD drivers, helping to mitigate the need for higher tariffs.

The government is moving forward with the private sector participation process for second batch of Discos, i.e. Hesco and Sepco, for which conditions precedent – in line with World Bank recommendations and including outstanding subsidy claims; outstanding balances with the government, other Discos, and other entities; and other balance sheet issues – will be completed by the end of December 2026 as structural benchmark under the IMF programme.

For improving the transmission system, the appointment of a CEO to the Independent System and Market Operator is underway, as are efforts to finalise staffing arrangements.

The incorporation and legal formation of the Energy Infrastructure and Development Management Company (EIDMC) have been completed, and its leadership selection process has also been initiated.

The National Grid Company (NGC) is operational and is undergoing a review of its processes in the context of its new role.

If privatisation does not prove feasible, work to bring relevant companies under one entity to reduce redundancies will be done, make necessary improvements, and enhance operations.

The Nepra issued wheeling auction framework guidelines in January 2026; this will enable auctions under the auspices of the Competitive Trading and Bilateral Contract Market (CTBCM).

The first wheeling auction, for 200MW, will take place by the end of June 2026.

Prices of gold and silver remained stable in domestic and international markets on Saturday.

In the local market, the price of gold per tola held steady at Rs490,362, while 10 grams of gold remained at Rs420,406.

On the global market, gold prices per ounce were stable at $4,676.

Silver prices also remained firm, with one tola trading at Rs7,794 and 10 grams at Rs6,682. Globally, the price of silver per ounce held steady at $73.10.

Read: SBP injects Rs13.68tr into market

Yesterday, gold prices in Pakistan rose, tracking an upward trend in the international market. In the domestic market, the price of gold per tola climbed by Rs3,400 to settle at Rs490,362.

Likewise, the price of 10 grams of gold increased by Rs2,915, reaching Rs420,406, according to figures released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

A day earlier, on Thursday, gold prices had declined, with the per tola rate falling by Rs7,100 to Rs486,962.

In the global market, gold prices gained $34, reaching $4,676 per ounce, including a $20 premium.

Moreover, silver prices also moved higher, rising by Rs160 to Rs7,794 per tola.

Meanwhile, on Friday, the Pakistani rupee posted a slight gain against the US dollar in the interbank market.

By the close of trading, the local currency stood at 279.10, appreciating by Rs0.01 against the greenback. On Thursday, it had settled at 279.11.

In global markets, China’s yuan strengthened against the US dollar as the latter steadied, with investor attention shifting to the release of US payroll data later in the day.

The dollar had surged a day earlier on safe-haven demand after US President Donald Trump signalled that the Iran conflict could persist.

The spot yuan opened at 6.8930 per dollar on Friday and was last trading 37 pips higher than its previous close.