Govt may deduct Rs110b from NFC

The Express Tribune reported that the federal government has briefed the IMF on plans to recover more than Rs110 billion in power-sector arrears by deducting the sum from the provincial portion of the National Finance Commission award. The lender voiced worry about the fiscal fallout, and officials reportedly gave no firm answer on whether uniform electricity tariffs would be scrapped once distribution companies are privatised.

Discussions also covered the circular debt, which rose by Rs61 billion last fiscal year to Rs1.675 trillion, a jump the Power Division linked to lower budgeted subsidies and a payment dispute with K-Electric. Sources said the federal government is prepared to clear more than Rs100 billion in K-Electric's claims, provided tariff issues are resolved first. Nepra and its tribunal rejected the company's plea for a Rs40 per unit tariff and approved Rs32.37 per unit, and officials expect K-Electric to contest the decision in courts.

The IMF also asked about a delayed review of the industrial incremental support package, with a hearing scheduled for October 5. Sources added that incremental tariffs could rise after the review, and the special Rs22.96 per unit rate applies to select industries.