Author: none@none.com (Khaleeq Kiani)
Pakistan’s Rising Debt Servicing Costs & Impact on Development Spending In a recent report by the Ministry of Finance, it was revealed that Pakistan’s debt servicing costs have surged by over 64% this year, far exceeding the 30% growth in revenue. This has resulted in a significant reduction in development spending, with almost no funds being allocated to uplift projects. The main reason cited for this financial crisis is the high interest rates imposed by the IMF, which have led to a substantial increase in interest payments. The interest expense for the first six months of the fiscal year stood…
The Battle of Tariffs Continues: The Government Hints at Incentives for Industry Amidst calls for a 25% increase in annual tariff rebasing, the government is considering offering an incentive package to the industrial sector as part of wider power sector reforms to stimulate electricity demand and support economic growth. At a public hearing chaired by Nepra Chairman Waseem Mukhtar, representatives from various industrial and consumer groups in Karachi expressed concerns about the proposed tariff hike, stating that they were already struggling under current conditions. The meeting focused on a proposed 25% increase in power purchase price for national electricity tariff…
The circular debt in the power sector has exceeded Rs2.63 trillion in the first seven months of the current fiscal year, surpassing the government’s target of Rs2.31 trillion. Despite tariff adjustments and efforts to reduce the debt, it continued to rise, with a net increase of Rs325 billion. The latest data released by the Power Division of the Ministry of Energy revealed that the circular debt increased by Rs84 billion in January 2024, reaching Rs2.63 trillion compared to Rs2.55 trillion in December 2023. The report highlighted that distribution companies were the main contributors to the debt increase, causing a rise…
In a bold move to enhance financial support and promote environmental sustainability, the government of Pakistan is considering introducing a carbon tax on petroleum products. This step aims to align with international standards and secure aid from institutions like the International Monetary Fund for green bonds and cheaper loans. The carbon tax, alongside an increased petroleum levy, could generate substantial revenue to support the country’s economic development. Additionally, measures are being explored to broaden the tax base and encourage compliance through carrot-and-stick approaches. Non-filers may face higher withholding taxes on bank transactions, while retailers are urged to join a voluntary…
The Power Price Hike: An Overview In a bid to secure a revenue requirement of about Rs4 trillion for power companies in FY25, the government has formally sought a 25% increase in the national electricity tariff starting July 1, 2025. The request, submitted by the Central Power Purchasing Agency (CPPA) to Nepra, outlines a proposed increase of Rs4.40 to Rs6.51 per unit in the overall power purchase price (PPP) for the upcoming fiscal year. With estimates suggesting a demand growth of 3-5%, the CPPA has presented various scenarios for electricity sales in FY25, ranging from 131,000 to 139,000 gigawatt hours.…