KARACHI: Pakistan is set to increase fuel, electricity, and gas prices from July 1, 2025, as part of a broader package of economic reforms agreed with the International Monetary Fund (IMF) ahead of the upcoming federal budget, officials confirmed.
The reform measures, aimed at reducing the fiscal deficit and curbing the ballooning circular debt in the energy sector, include new levies and tariff adjustments. These steps are expected to significantly impact household and industrial consumers across the country.
Key changes include the introduction of a Rs5 per litre carbon levy on petrol and diesel, a debt service surcharge on electricity bills, and biannual gas price hikes scheduled for July 2025 and February 2026. Additionally, electricity prices will be rebased annually starting July 2025.
The government has also decided to borrow Rs1.25 trillion from commercial banks to help pay off energy-sector liabilities. This loan will be recovered from consumers through a 10% surcharge on electricity bills over the next six years. The surcharge may be increased if required.
The IMF has been assured of reduced power sector subsidies, with only targeted relief expected going forward. Provincial governments will not offer any additional support under the new fiscal framework.
The National Electric Power Regulatory Authority (NEPRA) will continue quarterly adjustments and enforce fuel cost revisions to maintain price realism. The cabinet is expected to approve an updated Circular Debt Management Plan in July.
As of January 2025, the electricity sector’s circular debt had surged to Rs2.44 trillion, while gas sector debt stood at Rs2.29 trillion. Officials said Rs348 billion in pending payments to Independent Power Producers (IPPs) would be cleared by June to improve liquidity in the sector.
While energy-sector reforms yielded Rs450 billion in gains during the first half of the current fiscal year, authorities stress that improving cost recovery remains vital to long-term price stability.
