The Ministry of Planning, Development, and Special Initiatives has declined to comply with the Economic Coordination Committee’s (ECC) decision to allocate Rs50 billion in additional subsidies for the power sector, citing the Public Finance Management (PFM) Act 2019, which restricts the allocation of funds under the Public Sector Development Programme (PSDP) to approved development projects.
According to a news report, the request for the subsidy stems from the ECC’s decision on May 5, 2025, to waive tariff rebasing for up to 200 units of electricity, aiming to reduce the burden of circular debt as per agreements with the International Monetary Fund (IMF).Â
However, the Planning Ministry has argued that after a reduction of Rs300 billion in the PSDP for FY2024-25, it cannot surrender an additional Rs50 billion, although it has no objection to reallocating the amount from funds already surrendered by other ministries.
In response, the Planning Ministry advised the Power Division to approach the Finance Division for the reallocation of the necessary funds. The Finance Division had initially approved the Rs50 billion reallocation for the power subsidy in a Cabinet meeting on July 8, 2024, but due to a downward revision in PSDP allocations, the ministry was unable to accommodate the request.
The funds are part of the government’s efforts to meet circular debt targets set with the IMF, with the Power Division also requesting a Technical Supplementary Grant of Rs24.5 billion for solarization projects in Balochistan.
