IMF seeks Pakistan’s plan to reduce power theft, losses amid bailout review

The International Monetary Fund has asked Pakistan to submit detailed proposals aimed at curbing electricity theft, reducing line losses, and cutting capacity charges, as talks between the two sides continue under the second economic review of the ongoing bailout programme.

The discussions are part of efforts to secure the release of a $1 billion tranche under the Extended Fund Facility (EFF) and an additional $220 million under the Resilience and Sustainability Facility (RSF).

Sources told Express Tribune that the International Monetary Fund (IMF) also demanded clarity from the federal government regarding the shortfall in provincial surplus targets, which stood at Rs921 billion against a target of Rs1,200 billion for the fiscal year. Punjab posted a surplus of Rs348 billion, Sindh Rs283 billion, Khyber-Pakhtunkhwa (K-P) Rs176 billion, and Balochistan Rs114 billion. The K-P government is expected to brief the IMF separately between September 29 and October 1.

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The development comes as Pakistan informed the IMF on Friday that it is unlikely to meet the Rs3.1 trillion tax collection target for the current quarter, according to briefings by tax authorities.

In a separate meeting, officials from the Power Division briefed the visiting IMF mission on the status of energy sector reforms. The Fund reportedly expressed concerns over inefficiencies, including high system losses and expensive capacity payments made to underutilised power plants.

To address these issues, the federal government assured the IMF that it plans to eliminate the circular debt ahead of the six-year deadline previously agreed. Authorities claimed that the stock of circular debt has already been reduced to Rs397 billion, down from earlier projections of Rs635 billion. They added that consumers would not face an additional burden, as payments would continue through an existing surcharge of Rs3.23 per unit.

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The Fund was also updated on ongoing negotiations with independent power producers (IPPs) and the privatisation process of three profitable electricity distribution companies. The government shared plans to utilise surplus electricity for industrial consumption and cryptocurrency mining, while reaffirming its commitment to transferring control of loss-making entities to the private sector.

The briefing further covered plans to restructure Rs660 billion in legacy debt and raise Rs565 billion in new financing as part of the upcoming loan package. Officials expressed optimism that the measures would help stabilise the energy sector and restore investor confidence.