Govt plans to recover over Rs110 billion power arrears from provincial NFC shares amid IMF concerns

The federal government has briefed the IMF on a scheme to collect over Rs110 billion of provincial power dues by deducting amounts from provinces' NFC shares, The Express Tribune reported, citing sources. The lender voiced concern that the move could add to pressure on provincial budgets already facing requirements for a Rs1.7 trillion cash surplus and Rs1.036 trillion in cash grants.

Reconciled arrears now total at least Rs110 billion, and roughly Rs50 billion is targeted for recovery soon. Provinces have resisted such deductions before, and it is still unclear whether they have authorised the State Bank to carry them out. Separately, the Power Division told the IMF that circular debt grew by Rs61 billion over the previous fiscal year, reaching Rs1.675 trillion, and linked the rise to subsidies below budget plus a payment disagreement involving K-Electric.

On K-Electric, the government is prepared to settle over Rs100 billion in claims, provided tariff disagreements are resolved first. Nepra and its tribunal turned down the company's Rs40 per unit tariff request and approved Rs32.37 per unit, and the government expects a court challenge. The IMF also asked why the industrial incremental support package review was delayed, and a hearing is set for October 5. Higher incremental tariff rates could follow the review, which covers a package introduced in December 2025 offering Rs22.96 per unit.