Pakistan assures IMF of electricity and gas price hikes

ISLAMABAD — The government has assured the International Monetary Fund (IMF) that electricity and gas prices will be increased on schedule. The commitment comes as Pakistan faces a major shortfall in tax revenue during the current financial year.

Officials told the IMF that the government will follow a strict plan to improve tax collection, reform the energy sector, and reduce circular debt. They said tougher enforcement of existing tax laws will begin soon. A new roadmap for extra tax measures is expected before the end of this month.

According to the plan, the government may raise federal excise duty by 5% on fertilizers and chemicals. New taxes could also be placed on premium sugary products. Authorities also aim to tighten production monitoring in the cement and sugar industries.

The government wants to move 40,000 big retailers under a full Point-of-Sale (POS) system within two years. Digital invoicing will expand, and some items may shift from the 8th GST schedule to the general GST list. This will increase revenue and reduce loopholes.

Energy tariff reforms

Pakistan has also informed the IMF that electricity and gas tariff adjustments will be made on time. Automatic monthly and quarterly changes will continue under the excess electricity consumption scheme.

This scheme will end after three years or earlier if tariffs are raised for two straight reviews. The government said protections for low-income consumers will stay in place. But tariffs for industries and agriculture may rise if revenue targets fall short.

The government will publish a Gas Sector Circular Debt Management Plan by March 2026. The long-term target is to end circular debt in the gas sector by the 2030–31 fiscal year. Steps to curb gas theft and reduce line losses are also part of the plan.

Privatization and future projects

Privatization of the Islamabad, Gujranwala, and Faisalabad electric supply companies is set for early 2026. Meanwhile, a new power sector plan aims to shut down about 7,000 MW of extra capacity. Officials say this could lower tariffs and save nearly $17 billion over the next decade.