Islamabad approves $713 million to ease power sector’s cash flow constraints

Finance Minister Muhammad Aurangzeb (third right) chairs a meeting of the Economic Coordination Committee (ECC) in Islamabad, Pakistan, on December 18, 2025. (Finance Ministry)
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Updated 19 December 2025
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Islamabad approves $713 million to ease power sector’s cash flow constraints

  • Finance minister chairs Economic Coordination Committee meeting to approve grants, review economic situation
  • Pakistan is grappling with a ballooning “circular debt,” or unpaid bills and subsidies, that has choked its power sector

KARACHI: Pakistan’s top economic body this week approved a grant of $713 million to ease the power sector’s cash flow constraints, the Finance Division said in a statement, as Islamabad looks to reform its priority sectors. 

The development took place as Finance Minister Muhammad Aurangzeb chaired a meeting of the Economic Coordination Committee (ECC) to approve grants for various projects and review the overall economic situation of the country. 

“[ECC approved] another Technical Supplementary Grant amounting to Rs200 billion ($713 million) under the head of Government of Pakistan investment in DISCOs’ equity to address cash flow constraints in the power sector,” the Finance Division said on Thursday. 

DISCOs, which handle billing, recoveries and grid maintenance, have long suffered from corruption and political interference. 

Pakistan has attempted to privatize its loss-making state-owned enterprises to raise funds and reform them as envisaged under a $7 billion International Monetary Fund (IMF) program secured last year. 

Prime Minister Shehbaz Sharif’s government plans to privatize three DISCOs, the Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO) and Gujranwala Electric Power Company (GEPCO) in the months ahead. 

The Pakistani government, which owns or controls much of the power infrastructure, is grappling with a ballooning “circular debt,” or unpaid bills and subsidies, that has choked the power sector and weighed on the economy.

The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under Pakistan’s IMF program.

The ECC also approved, on the interior ministry’s proposal, a provision of Rs 4.775 billion [$17.19 million] as payment to 945 families of “missing persons” as identified by the Commission of Inquiry on Enforced Disappearances. 

“The disbursement will be made under the supervision of the Commission in accordance with approved procedures,” it added. 

Taking stock of the economic situation, the ECC noted that cumulative inflation for the period July–November averaged 5 percent, which it said was “significantly lower” than the 7.9 percent figure recorded during the corresponding period of the previous year. 

It attributed this improvement to prudent fiscal management, effective price stabilization measures and close market monitoring by the government.


Sindh assembly passes resolution rejecting move to separate Karachi

Updated 21 February 2026
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Sindh assembly passes resolution rejecting move to separate Karachi

  • Chief Minister Shah cites constitutional safeguards against altering provincial boundaries
  • Calls to separate Karachi intensified amid governance concerns after a mall fire last month

ISLAMABAD: The provincial assembly of Pakistan’s southern Sindh province on Saturday passed a resolution rejecting any move to separate Karachi, declaring its territorial integrity “non-negotiable” amid political calls to carve the city out as a separate administrative unit.

The resolution comes after fresh demands by the Muttahida Qaumi Movement (MQM) and other voices to grant Karachi provincial or federal status following governance challenges highlighted by the deadly Gul Plaza fire earlier this year that killed 80 people.

Karachi, Pakistan’s largest and most densely populated city, is the country’s main commercial hub and contributes a significant share to the national economy.

Chief Minister Syed Murad Ali Shah tabled the resolution in the assembly, condemning what he described as “divisive statements” about breaking up Sindh or detaching Karachi.

“The province that played a foundational role in the creation of Pakistan cannot allow the fragmentation of its own historic homeland,” Shah told lawmakers, adding that any attempt to divide Sindh or separate Karachi was contrary to the constitution and democratic norms.

Citing Article 239 of Pakistan’s 1973 Constitution, which requires the consent of not less than two-thirds of a provincial assembly to alter provincial boundaries, Shah said any such move could not proceed without the assembly’s approval.

“If any such move is attempted, it is this Assembly — by a two-thirds majority — that will decide,” he said.

The resolution reaffirmed that Karachi would “forever remain” an integral part of Sindh and directed the provincial government to forward the motion to the president, prime minister and parliamentary leadership for record.

Shah said the resolution was not aimed at anyone but referred to the shifting stance of MQM in the debate while warning that opposing the resolution would amount to supporting the division of Sindh.

The party has been a major political force in Karachi with a significant vote bank in the city and has frequently criticized Shah’s provincial administration over its governance of Pakistan’s largest metropolis.

Taha Ahmed Khan, a senior MQM leader, acknowledged that his party had “presented its demand openly on television channels with clear and logical arguments” to separate Karachi from Sindh.

“It is a purely constitutional debate,” he told Arab News by phone. “We are aware that the Pakistan Peoples Party, which rules the province, holds a two-thirds majority and that a new province cannot be created at this stage. But that does not mean new provinces can never be formed.”

Calls to alter Karachi’s status have periodically surfaced amid longstanding complaints over governance, infrastructure and administrative control in the megacity, though no formal proposal to redraw provincial boundaries has been introduced at the federal level.