The EFF’s Energy Conditions: Prices, Costs, and Private Participation

The IMF Executive Board approved Pakistan's 37-month Extended Fund Facility on 25 September 2024: SDR 5,320 million, about USD 7 billion and 262 per cent of quota, with SDR 760 million released immediately. By our arithmetic the first tranche is 14.3 per cent of the total, which leaves most of the money tied to reviews. Energy will decide many of those reviews. The staff report, dated 11 September, sets out the starting position plainly. Power-sector circular debt stood at PRs 2,794 billion, or 2.6 per cent of GDP, at end-March 2024.

The FY25 budget carries PRs 1,229 billion in power subsidies, 1.0 per cent of GDP. On generation, the staff note that capacity payments account for about 60 per cent of generation costs, and the government commits to settle up to PRs 263 billion of arrears to IPPs and government power producers on revised PPA terms. We think the programme is right about the order of operations and too cautious on the cost side. The first review will show whether quarterly power adjustments are being notified on time.