Govt eyes Rs110bn cut from provincial NFC shares

Summary

• ISLAMABAD: The federal government has informed the International Monetary Fund (IMF) about a plan to recover more than Rs110 billion in power-sector arrears from the provinces.
• The government told the IMF that more than Rs110 billion in provincial electricity dues had been reconciled.
• The financial dispute between K-Electric and the federal government was also discussed during the IMF talks.

AI Generated Summary

ISLAMABAD: The federal government has informed the International Monetary Fund (IMF) about a plan to recover more than Rs110 billion in power-sector arrears from the provinces.

The amount would be recovered from provincial shares under the National Finance Commission (NFC) award.

The proposal was discussed during recent talks with the IMF. The lender raised concerns about the financial impact of the plan on provincial governments.

The government told the IMF that more than Rs110 billion in provincial electricity dues had been reconciled. It also said that nearly Rs50 billion could be recovered soon.

The federal government has previously tried to adjust power-sector dues against provincial NFC shares. However, provincial governments have opposed the move.

The deduction also requires proper authorisation from the provinces. Without the necessary authority, the State Bank of Pakistan cannot make the deductions from provincial accounts.

The IMF is concerned that the recovery could further strain provincial finances. Provinces are already facing pressure to generate a combined cash surplus of Rs1.7 trillion.