The Pakistani government, aiming to ease financial pressure and provide relief to consumers, has ruled out any connection between obtaining fresh IMF loans and securing debt rescheduling from Chinese Independent Power Producers (IPPs). To facilitate negotiations for a more manageable repayment plan, the government has established the Power Sector Financing Steering Committee, tasked with negotiating a three-year agreement for staggered debt repayments.
Pakistan is initially seeking a five-year extension on the repayment of $15.4 billion owed to Chinese IPPs, with the proposed timeline now stretching until 2036. This rescheduling initiative is designed to offer the country some much-needed financial breathing space, providing a cushion of 3 to 5 years. Additionally, the relief from extended repayments could enable the government to lower power tariffs by Rs 2 to 3 per unit, directly benefiting consumers and easing the overall burden on the economy.
The government’s approach reflects a strategic move to stabilize the power sector and reduce the financial strain without compromising ongoing negotiations with the International Monetary Fund (IMF). By decoupling the debt rescheduling efforts from the IMF loan discussions, Pakistan aims to create a more sustainable path forward for its power sector and broader economic stability.
