Pakistan Backs Power Sector with Rs. 200 Billion as Inflation Trends Improve

Pakistan’s top economic decision-making body has approved a Rs. 200 billion cash injection into power distribution companies, signaling a renewed push to stabilize the country’s strained power sector as inflation shows signs of easing.

The Economic Coordination Committee of the Cabinet cleared the Technical Supplementary Grant on Thursday under the Government of Pakistan’s investment in DISCOs’ equity. The move aims to ease cash flow pressures that have weighed on the power sector for years.

Finance and Revenue Minister Muhammad Aurangzeb chaired the meeting. He opened the session with a review of the broader economic landscape, focusing on inflation trends and food security, before steering the committee through a packed agenda for fiscal year 2025-26.

Dr. Imtiaz Ahmad, Chief Economist at the Planning, Development, and Special Initiatives Division, briefed the committee on current economic conditions. He reported a notable improvement in inflation during the ongoing fiscal year, pointing to stronger price stability and tighter macroeconomic controls.

Headline inflation remained subdued early in the year. It stood at 4.1 percent in July and 3.0 percent in August. However, flood-related supply disruptions pushed prices higher in September and October. Even so, inflation cooled again to 6.1 percent in November, signaling easing pressure.

The committee noted that average inflation from July to November came in at 5.0 percent. This compares with 7.9 percent during the same period last year. Officials credited disciplined fiscal management, price control measures, and close market oversight. Inflation also stayed within budget projections.

Weekly data from the Sensitive Price Indicator supported the trend. Prices of 10 out of 51 essential commodities declined week-on-week, offering visible relief to consumers. Meanwhile, officials said agricultural supply chains are normalizing as post-flood cycles advance.

Following the briefing, the ECC approved several funding proposals. It cleared a Rs. 6.358 billion Technical Supplementary Grant for the Power Division to execute SDGs Achievement Programme schemes in Punjab, Islamabad Capital Territory, Sindh, and Khyber Pakhtunkhwa. The committee then approved the separate Rs. 200 billion grant for DISCOs’ equity.

Education funding also received a boost. The ECC approved Rs. 5,760.270 million for Danish schools in Azad Jammu and Kashmir, Gilgit-Baltistan, and Balochistan. The funds will also support the Prime Minister’s Youth Skill Development Programme through NAVTTC. However, the committee urged the division to explore public-private partnerships to improve long-term sustainability.

In housing, the ECC approved Rs. 5,190.000 million for PIDCL. The funding will support SDGs Achievement Programme projects in Sindh and Khyber Pakhtunkhwa.

Tourism was another focus area. The committee approved Rs. 170.400 million for the Pakistan Tourism Development Corporation’s 2025-26 budget. The Ministry of Inter-Provincial Coordination was instructed to submit a detailed business plan covering PTDC’s role, governance, staffing, and alignment with the national tourism strategy.

The ECC also revised eligibility criteria for the Prime Minister’s Fan Replacement Programme. Officials said the changes will improve execution, boost energy efficiency, and reduce electricity consumption.

On humanitarian grounds, the committee approved Rs. 4.775 billion for 945 families of missing persons. The Commission of Inquiry on Enforced Disappearances will oversee payments under approved procedures.

Security-related approvals followed. The ECC cleared Rs. 79.00 million for the annual maintenance of Frontier Corps Balochistan North helicopters in Quetta. It also approved Rs. 10.821 million for the repair and maintenance of Pakistan Rangers Sindh helicopters during FY 2025-26.

The committee approved a revised PC-I for constructing 104 additional family suites for Members of Parliament, including servant quarters. The Capital Development Authority was directed to submit a full asset maintenance and infrastructure preservation plan.

In the defense sector, the ECC approved Rs. 40 million for SDGs Achievement Programme development schemes. It also cleared Rs. 250 million to operationalize King Hamad University of Nursing and Allied Medical Sciences this financial year.

Federal ministers for power, petroleum, commerce, planning, national food security, and investment attended the meeting. Senior officials from key ministries, divisions, and regulatory bodies were also present.