Pakistan regulator increases power tariff by 20 percent amid new bailout talks with IMF/node/2530941/pakistan
Pakistan regulator increases power tariff by 20 percent amid new bailout talks with IMF
A technician from the Karachi Electric Supply Corporation (KESC), Pakistan's largest city's power supply company, fixes new electricity meters at a residential building in Karachi on May 13, 2010. (AFP/File)
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Friday announced an increase of around 20 percent in the uniform power tariff to generate Rs3.8 trillion in funds for 10 power distribution companies (discos) during the fiscal year 2024-25, amid Pakistan’s talks with the International Monetary Fund (IMF) for a new bailout program.
The Rs5.72 per unit increase, which will take effect from July 1 after the government issues a formal notification, will provide Rs485 billion in additional revenue to discos and strengthen the government’s position in securing an IMF bailout in July.
Islamabad is currently locked in talks with the IMF for a longer-term bailout of around $8 billion after the last $3 billion helped Pakistan avert a sovereign default in June last year. Pakistan is expected to formally request for the program in the coming weeks.
NEPRA said the total Power Purchase Price (PPP) of ex-WAPDA distribution companies (XWDISCOs) for FY 2024-25 worked out as Rs3,277 billion, which includes Rs1,161 billion for fuel & variable cost and Rs2,116 billion as capacity charges.
“The capacity charges translate into Rs.6,957/kW/month, based on projected average monthly MDI of 25,348 MW. Thus, the capacity charges works out as around 65 percent of the total projected PPP of XWDISCOs, whereas energy cost is around 35 percent of the total projected PPP,” it said in a circular.
“In terms of average per unit PPP of XWDISCOs on unit purchased basis i.e. before adjustment of allowed T&D losses of XWDISCOs, capacity charges works out as Rs. 17.66/kWh, whereas energy charges are Rs.9.69/kWh, totaling to Rs.27.35IkWh for the FY 2024-25.”
The national average power purchase price works out as Rs.27.00/kWh, according to NEPRA. The generation cost is transferred to the DISCOs as per the prescribed mechanism.
Under the last IMF bailout, Pakistan was told to prevent further accumulation of circular debt in its power sector, arising from subsidies and unpaid bills. For a new program, the South Asian nation will need to implement reforms to reduce costs by improving electricity transmission and distribution, moving captive power into the grid, improving governance, and combating theft.
It will also have to maintain power and gas tariffs at levels that ensure cost recovery, with adjustments made to safeguard the financially vulnerable, through existing progressive tariff structures.
The government has the authority to make adjustments with different rates of increases for various consumer categories without affecting the overall revenue requirement determined by NEPRA.
ISLAMABAD: Two hundred Chinese firms took part in the Health, Engineering and Minerals Show (HEMS) hosted by Pakistan in April, sealing trade and investment deals worth $375 million, Pakistani state media reported on Wednesday.
The HEMS 2025 was held in the eastern city of Lahore from Apr. 17-19, bringing together many global delegates to spotlight Pakistan’s strengths in key industries. The expo featured a dedicated Mineral Investment Pavilion and aimed to boost international trade, investment and industrial growth.
Pakistan aims to increase its economic partnership with China, with whom it also enjoys cordial ties. Chinese companies are collaborating with local Pakistani firms to establish joint ventures, with Beijing focusing on tapping Pakistan’s vast natural resources.
“Representatives from more than 150 Chinese companies engaged in a series of business-to-business meetings across health care, engineering, minerals and mining, resulting in the signing of 29 memorandums of understanding, letters of intent and contracts worth over $375 million,” the Pakistan Television Corporation (PTV) said in a report.
“Key agreements included a $60 million quartz stone export deal (with a $10 million investment component), a $45 million joint venture in medical device manufacturing and an $80 million technology transfer contract in electric vehicles.”
The statement said Chinese delegations led by Pakistan’s Ambassador to China Khalil Hashmi also expressed interest in salt, copper, fluorite, gemstones, information technology, real estate and the branding of Pakistani products.
The report said Prime Minister Shehbaz Sharif hosted a dinner for 800 delegates from 50 countries, during which he praised Ambassador Hashmi and his team for facilitating the largest-ever Chinese business delegation’s to visit Pakistan.
Pakistan is home to one of the world’s largest porphyry copper-gold mineral zones, while the Reko Diq mine in southwestern Balochistan province has an estimated 5.9 billion tons of ore. Barrick Gold, which owns a 50 percent stake in the Reko Diq mines, considers them one of the world’s largest underdeveloped copper-gold areas, and their development is expected to have a significant impact on Pakistan’s struggling economy.
Earlier in April, Pakistan also hosted a minerals summit aimed at attracting foreign investment in the country’s mining sector. It saw participation from major international companies including Canada-based Barrick Gold and government officials from the United States, Saudi Arabia, China, Turkiye, the United Kingdom, Azerbaijan and other nations.
ISLAMABAD: Pakistani foreign affairs and defense analysts on Wednesday condemned Indian media’s “warmongering” over the recent attack in Indian-administered Kashmir, warning that any military action by New Delhi would compel Pakistan to respond and hence, endanger regional peace.
Twenty-six people were gunned down at a tourist site in Indian-administered Kashmir on Tuesday afternoon. The attack took place in Pahalgam, a popular resort town in the Anantnag district, where armed men emerged from forest cover and opened fire on crowds of mostly domestic tourists.
India’s defense minister reacted to the region’s deadliest attack on non-combatants in decades, vowing a “loud and clear” response will be given to those who carried out the attacks as well as those who planned it, while Pakistan expressed concern at the attack. A little-known militant group, the “Kashmir Resistance,” claimed responsibility for the attack in a social media message, saying more than 85,000 “outsiders” had been settled in the region after arriving as tourists, vowing violence against such settlers.
Kashmir is divided between India and Pakistan since 1947, which they both claim fully but rule in part, and has been plagued by years of insurgent violence that New Delhi says is supported by Islamabad. Pakistan denies the accusations, saying it only provides diplomatic support to Kashmiris in their struggle for self-determination.
Such attacks have historically strained ties between India and Pakistan. In 2019, a suicide bombing in Pulwama killed 40 Indian paramilitary personnel and triggered cross-border air strikes, pushing the neighbors to the brink of war.
“Placing blame on Pakistan in a knee-jerk reaction, without investigation or evidence, and even engaging in warmongering is truly unfortunate,” Aizaz Ahmed Chaudhary, a former Pakistani foreign secretary, told Arab News.
He said the best course of action for India would be to probe the incident dispassionately, adding that Pakistan may even cooperate with the investigation.
“But they don’t talk to Pakistan at all, I think that would help us all reach the actual perpetrators who must be punished,” Chaudhary said.
Pakistan’s foreign office, government officials and the defense ministry did not respond to Arab News’ requests for comment.
Meanwhile, geopolitical and defense analyst Lt. Gen. (retired) Ghulam Mustafa described the attack as a “false flag operation,” alleging it was deliberately planned at a time when US Vice President JD Vance was in India.
He criticized the Indian media’s coverage of the incident.
“India has to do something because they have created significant hype around this issue,” Mustafa said. “And now they must address it, likely through some form of action against Pakistan along the Line of Control.”
Former diplomat Masood Khalid said it was a pity that the Indian media was in a state of frenzy and was accusing Pakistan without evidence.
“With over 700,000 Indian troops present in IoK [Indian occupied Kashmir], one wonders how the militants could make an ingress deep inside the occupied territory,” he questioned.
Khalid hoped India would address the grievances of the people of Kashmir, saying that they were waging a struggle for their right to self-determination.
Dr. Qamar Cheema, executive director of the Sanober Institute, a think tank that focuses on issues in Pakistan and South Asia, said there is a possibility that India may further downgrade relations with Pakistan given the sensitivity of the situation.
“Indian media, often echoing government views, can shape public sentiment that justifies military action against Pakistan,” Cheema explained. “Especially as the Indian defense minister has already met with service chiefs.”
’WILL NOT TAKE IT LYING LOW’
Chaudhary said that if India launched an attack anywhere in Pakistan, it would be “most irresponsible.”
“I mean Pakistan has the capacity to defend itself and would not really take it lying low; therefore, they [India] must not get into this otherwise it can be very costly for this whole region,” he said.
Khalid agreed.
“On its part, Pakistan will be fully prepared to respond to any aggressive move by India,” he said.
A security official who spoke on condition of anonymity said India was diverting attention from the episode when the TRF had already claimed responsibility for the attack.
“Have the consequences of this hysteria been weighed? Pakistan, will not remain passive in the face of any action across its borders and the consequences will disturb regional peace,” he said.
ISLAMABAD: Pakistani Prime Minister Shehbaz Sharif has called a meeting of the National Security Committee today, Thursday, after New Delhi announced a raft of measures to downgrade its ties with the neighbor following a deadly militant attack in Indian-administered Kashmir.
The shooting, the deadliest attack on non-combatants in Kashmir in decades, occurred Tuesday afternoon in Pahalgam, a popular resort town in the Anantnag district, where armed men emerged from forest cover and opened fire on crowds of mostly domestic tourists. A little-known militant group, the “Kashmir Resistance,” claimed responsibility for the attack in a social media message. Indian security agencies say Kashmir Resistance, also known as The Resistance Front, is a front for Pakistan-based militant organizations such as Lashkar-e-Taiba and Hizbul Mujahideen.
Indian Foreign Secretary Vikram Misri told a media briefing that the cross-border linkages of the attack had been “brought out” at a special meeting of the security cabinet, after which it decided to act against Pakistan.
“Prime Minister Shehbaz Sharif has convened the meeting of the National Security Committee on Thursday morning … to respond to the Indian government’s statement,” Deputy Prime Minister Ishaq Dar said on X.
Among the measures announced by Misri was the suspension with immediate effect of the Indus Waters Treaty that allows for sharing the waters of the Indus river system between the two countries. The defense advisers in the Pakistani high commission in New Delhi were declared persona non grata and asked to leave within a week, Misri said, adding that the overall strength of the Indian high commission in Islamabad would be reduced to 30 from 55.
A main border crossing check post between the two countries would be closed immediately and Pakistani nationals would not be allowed to travel to India under special visas, Misri said.
“Pakistani nationals will not be permitted to travel to India under the SAARC Visa Exemption Scheme visas,” the Indian foreign secretary said.
“Any SVES visas issued in the past to Pakistani nationals are deemed canceled. Any Pakistani national currently in India under SVAS visa has 48 hours to leave India.”
Indian Prime Minister Narendra Modi, who cut short a state visit to Saudi Arabia after the attack, called it an “heinous act” and pledged justice against the perpetrators.
The Pakistan army has not yet responded to the Indian measures.
Indian Foreign Secretary Vikram Misri addresses a media briefing in New Delhi, India, on April 23, 2025. (MEA India/YT/Screengrab)
“RECKLESS”
Kashmir has been divided between India and Pakistan since 1947, which both claim fully but rule in part, and has been plagued by years of insurgent violence that New Delhi says is supported by Islamabad. Pakistan denies the accusations, saying it only provides diplomatic support to Kashmiris in their struggle for self-determination.
Such attacks have historically strained ties between India and Pakistan. In 2019, a suicide bombing in Pulwama that killed 40 Indian paramilitary personnel triggered cross-border air strikes, pushing the neighbors to the brink of war.
“It is not appropriate to vent anger over terrorism on Pakistan,” Deputy PM Dar told Pakistan’s Geo News in an interview, saying the foreign office would present its recommendations at the national security meeting on how to respond to India’s measures.
“India has a habit of shifting the blame for its own problems onto Pakistan. If India has any evidence instead of mere accusations, it should present it,” he added, promising that Pakistan would give a “fitting response” to New Delhi’s actions.
Minister for Power Awais Leghari called India’s suspension of the Indus Waters Treaty “reckless” and an “act of water warfare, a cowardly, illegal move.”
The Indus Water Treaty is a 1960 agreement between India and Pakistan that divides the water of the Indus River system between the two countries. It allocates the eastern rivers (Ravi, Beas, and Sutlej) to India for unrestricted use, and the western rivers (Indus, Jhelum, and Chenab) to Pakistan, giving them a larger share of the total water flow. The treaty, brokered by the World Bank, has been a crucial factor in maintaining peace and cooperation between the two nations despite political tensions.
The suspension removes current restrictions, allowing India more freedom to control water flows from the western rivers.
“Every drop is ours by right, and we will defend it with full force, legally, politically, and globally,” Leghari said on the Indus Waters Treaty’s suspension.
HISTORY OF CONFLICT
A violent separatist insurgency has simmered in the Indian-administered part of Kashmir since the late 1980s, although militant violence had declined in recent years.
After partition of the subcontinent in 1947, Kashmir was expected to go to Pakistan, as other Muslim majority regions did. Its Hindu ruler wanted to stay independent but, faced with an invasion by Muslim tribesmen from Pakistan, acceded to India in October 1947 in return for help against the invaders.
Kashmir ended up divided among Hindu-majority India, which governs the Kashmir Valley, Jammu, and Ladakh; Muslim-majority Pakistan, which controls Azad Kashmir (“Free Kashmir“) and the Northern Areas, and China, which holds Aksai Chin.
Indian-administered Kashmir has a population of around 7 million, of whom nearly 70 percent are Muslim.
Article 370 of the Indian constitution which provided for partial autonomy for Jammu & Kashmir was drafted in 1947 by the then prime minister of the state, Sheikh Abdullah, and accepted by India’s first prime minister Jawaharlal Nehru. Although intended as temporary, it was included in India’s Constitution in 1949 by the constituent assembly.
In August 2019, Prime Minister Narendra Modi’s government revoked Kashmir’s semi-autonomous status in a move it said would better integrate the region with the rest of the country. The state was reorganized into two federally administered union territories- Jammu and Kashmir, and Ladakh. Pakistan strongly objected, downgrading diplomatic ties with India and cutting off trade.
India and Pakistan have fought three wars since independence, two of them over Kashmir, in 1947 and 1965. A third in 1971 led to the creation of Bangladesh. In 1999, they clashed again in the Kargil region in what was described as an undeclared war. A UN-brokered ceasefire line, the Line of Control, now divides the region.
Many Muslims in Indian Kashmir have long resented what they see as heavy-handed rule by India. In 1989, an insurgency by Muslim separatists began. India poured troops into the region and tens of thousands of people have been killed.
India accuses Pakistan of arming and training militants, which Islamabad denies, saying it offers only moral and diplomatic support.
Modi says his 2019 decision brought normalcy to Kashmir after decades of bloodshed. Violence has tapered off in recent years, according to Indian officials, with fewer large-scale attacks and rising tourist arrivals. Targeted killings of civilians and security forces, however, continued to be reported.
In 2024, Jammu and Kashmir held its first local elections since the 2019 revocation of autonomy. Several newly elected lawmakers urged a partial restoration of Article 370. Key regional parties had boycotted or criticized the polls, saying the winners would not get any real political power.
ISLAMABAD: Pakistan’s central bank is expected to slash the policy rate in its upcoming Monetary Policy Meeting (MPC), a leading brokerage firm said on Wednesday, saying decreasing global oil prices and higher remittances make a strong case for a cut.
The State Bank of Pakistan (SBP) kept the interest rate unchanged at 12 percent in its last MPC meeting in March. The central bank put a hold on slashing the interest rate after it made a series of cuts totaling 1,000 basis points to revive the economy from a record high of 22 percent in June 2024.
The SBP is scheduled to hold its MPC committee meeting on May 5, Topline Securities said.
“In a Poll conducted by Topline Securities, 69 percent of the market participants expect a rate cut of at least 50bps, while 31 percent believe that the central bank will observe the status quo,” Topline Securities said in a report.
“The ratio of participants observing status quo has come down from 38 percent in previous poll to current 31 percent.”
The report said out of this 69 percent, 37 percent expect a rate cut of 50bps while 30 percent expect a rate cut of 100bps. Only 2 percent expect a rate cut of 150bps.
Topline Securities said that the SBP has further room to cut around 200bps till December as the FY26 inflation can average between 6-7 percent, translating into a real rate of 500-600bps.
“Furthermore, falling oil prices, falling dollar index and higher remittances also make a strong case for a rate cut,” it added. “However, the sustainability in prices/index of the former two (oil and dollar) is yet to be seen.”
Topline Securities said that despite its view, it believes the central bank will observe the status quo in the upcoming MPC meeting due to various reasons.
It said the expected foreign inflows for the second half of FY25 have not materialized yet and are expected to be received once the first review of the International Monetary Fund is approved by the Board.
Furthermore, the IMF has also mentioned in its press release that Pakistan remains committed to maintaining a sufficiently tight monetary policy to keep inflation low.
It said another reason why the central bank will maintain the same rate is because the US tariff risks still loom and “we expect the central bank to maintain status quo till any clarity on this global development.”
Inflation in Pakistan soared to around 40 percent in May 2023, driven by currency devaluation and subsidy removals for IMF approvals. But inflation dropped to a near-decade low of 1.5 percent in February, providing room for the central bank to boost growth.
Economists also warn of the risk of the government taking advantage of lower interest rates to increase borrowing for an expansionary budget. That would potentially destabilize the progress made under the IMF program and crowd out the private sector.
KARACHI: Karachi residents continued to suffer the sweltering heat on Wednesday, with doctors and emergency responders advising citizens to exercise caution by staying hydrated and avoid venturing out unnecessarily.
An intense heatwave gripped Pakistan’s southern Sindh province this week, particularly its commercial capital of Karachi. The temperature in Karachi soared to 41 degrees Celsius on Monday while it declined to 39 degrees Celsius on Tuesday and 38.6 degrees Celsius on Wednesday.
Pakistan ranks among the top ten nations most vulnerable to climate change, grappling with increasingly frequent extreme weather events— from deadly heatwaves to devastating floods. The 2015 heatwave claimed over 2,000 lives in Karachi alone, and the 2022 floods left more than 1,700 dead and over 33 million displaced nationwide.
“I’ve already drunk water from three or four places, but still the heat is so overwhelming that it’s hard to make sense of things,” Ejaz Ahmed, a rickshaw driver, told Arab News while stopping at a roadside stall offering water.
“In Karachi, the pollution is very high— there’s smoke, there’s pollution.”
Traffic constable Nadir Ali has to perform his duties while the harsh rays of the sun beat down on Karachi. Ali said the unbearable heat makes it difficult for him to perform his job.
“We are standing here at Kharadar Chowk on the road and the heat is intense,” Ali told Arab News. “The heat is very strong and we are covering our heads while carrying out our duties.”
However, according to Meteorologist Anjum Zaigham, there is some relief in sight for Karachi residents as the temperature is expected to decline slightly starting Thursday.
“Starting tomorrow, we expect a slight decrease— temperatures should hover between 36 and 38 degrees,” he told Arab News.
“Sea breezes will continue which will lead to higher humidity levels by evening. As a result, the perceived heat will feel two to three degrees higher than the actual temperature,” Zaigham added.
Experts say rising temperatures are linked to climate change, putting vulnerable populations at risk. Muhammad Amin, who oversees operations at a heatwave camp set up by the Edhi Foundation, said the organization has instructed its drivers to carry cold drinking water and keep damp cloth with them to cover their heads with.
“It’s extremely hot in Karachi. In response, this small setup has been arranged: if people troubled by the heat come here, water is poured over their heads, and they are advised to keep a cloth on their heads afterward,” Amin said.
“So far, there have been no reports of deaths caused by the heat,” Amin said, crediting growing public awareness for it.
“Awareness has increased significantly— people now have more information about how to deal with the heat.”
Doctors, meanwhile, urge citizens to exercise caution amid the heatwave.
“Do not go outside unnecessarily, especially between 10 am to 12 or 1 pm,” Dr. Akash Kumar, a doctor at the Jinnah Postgraduate Medical Center (JPMC), which is Sindh’s largest health facility, said.
“If your work involves being out in the heat, try to wear a cap. If you cannot wear a cap, then at least try to stay out of direct sunlight,” he added.
He urged people to drink plenty of water and wear light and loose clothing.
“Please try to avoid going outside unnecessarily during these days when the risk of heat stroke is high,” he said.
