Islamabad, Nov 5: The federal government of Pakistan is facing a substantial financial deficit exceeding Rs. 1,075 billion within its electricity sector for the current fiscal year.
This shortfall is primarily due to high distribution losses and insufficient revenue from electricity sales, intensifying the pressure on the government to obtain extra funding.
To partially address this gap, authorities plan to gather Rs. 275 billion through a rebasing initiative aimed at electricity consumers.
. In order to enhance revenue collection, the government aims to lower these losses to approximately 17.3% and achieve a recovery rate of 90% by the fiscal year 2024-25.
Initiatives include strict measures to reduce DISCO losses, with set targets for individual companies: IESCO’s losses are expected to fall to 7.8%, LESCO to 14.5%, GEPCO to 11.8%, and PESCO to 35.7%.
Global organizations, such as the International Monetary Fund (IMF), back these rebasing efforts. The IMF has highlighted the critical need to address Pakistan’s circular debt through comprehensive management strategies that are still pending final approval from the federal cabinet.
Additionally, the government has set aside Rs. 358 billion in subsidies to support Independent Power Producers (IPPs) and state-operated power facilities, a crucial action considering that Pakistan’s circular debt could rise to Rs. 2,430 billion by the close of the fiscal year, reflecting an increase of Rs. 140 billion over the past two years.
These actions are a crucial step towards stabilizing Pakistan’s energy sector; however, long-term success will rely on effective policy execution and improved institutional collaboration.
