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Ministry asked to get IMF nod for oil tax
The Special Investment Facilitation Council (SIFC) has directed the Ministry of Finance to swiftly secure consent of the International Monetary Fund (IMF) for imposing sales tax on petroleum products as the matter has stalled investments of $6 billion in refinery upgrade projects.

The government had earlier agreed to remove sales tax exemption on petroleum products to support struggling oil refineries and oil marketing companies. It committed to imposing 5% sales tax on petroleum, but did not include it in the Finance Bill 2025, sparking concerns in the oil industry.

The Oil Companies Advisory Council (OCAC) – an industry lobby – had also raised the issue with the federal government for failing to meet the commitment and for continuing the tax exemption.

The oil industry claims it has suffered Rs34 billion in losses during the ongoing financial year, which has prompted the government to allow loss recovery through the inland freight equalisation margin.

"However, the main issue of GST removal from petroleum products remains in place," an industry official told The Express Tribune.

Sources said that the issue landed in a recent meeting of the SIFC, which voiced concern over delay in resolving the matter. The finance ministry informed the SIFC that it had presented the proposal of levying GST on petroleum to the IMF and was awaiting its consent.

The ministry expressed hope that the IMF's nod would be secured before the approval of budget by parliament.

Industry officials pointed out that the government had additionally imposed carbon and petroleum levies on furnace oil, which would cause a halt to their furnace oil sales.

Since the release of the Finance Bill 2024 in June last year, refineries have actively pursued the inclusion of high-speed diesel, motor spirit (petrol), kerosene oil and light diesel oil in the exemption regime under the Sales Tax Act, 1990 with the authorities concerned.

Through consistent and collaborative efforts from June 2024 to May 2025, the government approved a mechanism for reimbursing the additional cost of sales tax inputs, resulting from the exemption status of petroleum products for fiscal year 2024-25.

Regrettably, despite assurances and constructive engagement, the matter remains unresolved in the Finance Bill 2025. This undermines investor confidence, disrupts long-term planning and runs counter to objectives of Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023 that seeks to attract investments of $6 billion.

In case the dispute drags on, it will not only derail plant upgrade plans but will also pose financial and liquidity challenges to existing operations as refineries run under a regulatory pricing regime and are unable to recover this additional burden from product pricing.

Separately, a summary is circulating on social media, suggesting that the Ministry of Energy (Petroleum Division) has proposed the imposition of petroleum levy on high sulphur fuel oil (HSFO) at Rs82,077 per metric ton. This is in addition to a carbon levy of Rs2,665/MT on HSFO, as proposed in the Finance Bill 2025.

It is feared that the application of petroleum and carbon levies will result in an 80% increase in the end-user price of HSFO. This may lead to a further reduction in industrial activity and domestic demand. With lower local consumption, government revenues with respect to sales tax collection will go down markedly and refineries will be forced to export HSFO at a significant financial loss.

In addition, the refineries that consume HSFO as fuel in their own operations will be burdened with a sharp rise in operating costs due to the inclusion of petroleum and carbon levies.

Industrial growth key to achieving export-led economy: PM
Prime Minister Shehbaz Sharif, describing the industrial sector as the backbone of the country’s exports on Thursday, stressed that development of industries was essential to achieving export-led economic growth.

He ordered to finalise the industrial policy at the earliest to increase production and provide sustainable solutions to the challenges faced by industries. He also issued directions to the relevant authorities that the industrial policy be finalised in consultation with all relevant stakeholders.

Chairing a meeting on promotion of the industrial sector, the prime minister was informed that the manufacturing sector of the country would be revived through an effective industrial policy.

Meanwhile, PM Shehbaz Sharif ordered for employment of advanced technology to eliminate illegal trade of medicines amid a zero-tolerance policy and called for stringent oversight mechanisms. The PM chaired a high-level meeting on national health affairs, where he lauded the Ministry of National Health Services for its proactive approach under the leadership of Federal Minister Mustafa Kamal, a Prime Minister’s Office news release said.

In the meeting, PM Shehbaz emphasized that providing the best possible healthcare facilities to people remains the government’s top priority. He ordered for formulation of a collaborative roadmap involving welfare organisations and the private sector to improve health services in Islamabad.

Highlighting the importance of international standards, PM Shehbaz encouraged Pakistani pharmaceutical companies to seek accreditation from the World Health Organisation (WHO), stating it would not only enhance the quality of local medicines but also open doors to export opportunities.

The PM also underscored that there can be no compromise on the quality of medical education and ordered for the third-party validation of all medical colleges in Pakistan. He further instructed for a comprehensive review of the nursing sector to strengthen its capacity and service delivery.

During the briefing, officials informed the PM that the entire process for registering medicines and medical devices is being fully digitised and will be completed by the end of next month. Moreover, the registration timeline is being reduced from one year to just three months.

Separately, PM Shehbaz Sharif Thursday directed the authorities concerned to ensure transparency in all phases of Jinnah Medical Complex and Research Centre to be constructed in the federal capital. While chairing a meeting to review progress on the project, he said that Jinnah Medical Complex would be a state-of-the-art hospital equipped with the best medical facilities and advanced medical research equipment to serve the entire region.

PM Shehbaz also congratulated the administration, teachers and students of three Pakistani schools for securing a place among the world’s top 10 community-driven schools in the world’s best school prizes 2025. Among the Pakistani schools that earned the distinction are Sanjan Nagar Public Education Trust Higher Secondary School, Lahore, Beaconhouse College Programme (Juniper Campus), Quetta, and Nordic International School, Lahore. PM Shehbaz Sharif also praised the performance of the Ministry of Religious Affairs and the Minister for successfully organising the Haj operations this year. Federal Minister for Religious Affairs Sardar Muhammad Yousuf and Secretary Religious Affairs Attaur Rehman called on the prime minister here at the Prime Minister’s Office, a news release said.

Meanwhile, PM Shehbaz Sharif held separate meetings with Members of the National Assembly (MNAs) Nadeem Abbas Rebaira, Anwarul Haq Chaudhry, Muhammad Shehbaz Babar, Ahmad Atiq Anwar, and Rana Iradat Sharif here at the Prime Minister’s Office.

PM Shehbaz Sharif also held a farewell meeting with the outgoing Country Director of the World Bank in Pakistan Najy Benhassine.

Options being considered to generate another Rs30bn before budget passage
Pakistan’s budget makers are exploring options for some adjustments, either to impose additional taxes of Rs30 billion or reduce expenditures proportionally at the time of approval of the budget from parliament.
Top official sources confirmed to The News on Thursday that Prime Minister Shehbaz Sharif has now instructed the FBR in the budget meeting that for the first slab of salaried income, the tax rate is to be reduced from 5 to 1 per cent as finalised by the IMF in its original plan.
This rate was changed in the federal cabinet meeting held on June 10, 2025, at the time of granting approval of the budget, when Secretary Finance Imdadullah Bosal informed the cabinet that the budgetary numbers were locked with the IMF, so a change in expenditure would require some additional revenues.

This issue had come to the surface when the salaries for public sector employees were increased from 6 to 10 per cent. It requires an additional cost of Rs29-30 billion. In this cabinet meeting, it was decided that the rate of the first slab for income tax earnings from Rs0.6 million to Rs1.2 million would be reduced from 5 to 2.5 per cent. It was estimated that this measure could fetch an additional Rs9.5 billion. Some other tax rates were also proposed to be hiked slightly to adjust the overall expenditure requirement.

Now again, the PM asked the FBR to reduce the rate for the first slab as per the original proposal and bring it down from 5 to 1 per cent.

There are two options available with the government to stick to the agreed fiscal framework with the IMF, either to take additional revenue measures or slash the expenditures from anywhere, including restricting the hike in salaries by the original plan of 6 per cent.

It was interesting that the FBR had tabled its work on salaried class slabs with the Senate Standing Committee on Finance on Wednesday, in which the proposed rate was shown a reduction from 5 to 2.5 per cent for the first taxable slab.

The IMF seems quite tough on the budgetary numbers and, on the other hand, the finalisation of the budget is nearing, with the expectation that the approval of the budget for 2025-26 will be secured from the National Assembly by the end of next week. The Ministry of Finance and FBR high-ups are consistently engaged with the IMF, and there are some outstanding issues that are still on the table but not yet resolved between the two sides.

There are different priorities and choices within the PM Office, the Ministry of Finance, and FBR, which sometimes creates confusion. Deputy Prime Minister Ishaq Dar plays his role in evolving a consensus on such contentious issues and present it before the PM for getting its final resolution.

Senate panel opposes Rs2.5 per litre carbon levy on fuel
The FBR on Thursday informed the Senate Standing Committee on Finance and Revenue that the Digital Presence Proceeds Tax on International Platforms was proposed in the Finance Bill 2025-26, following the pattern of India, as New Delhi imposes digital tax on goods and services supplied digitally as an Equalization Levy.

Foreign vendors providing e-commerce goods or services will be taxed at a rate of 5 percent for income tax under the proposed Finance Bill. Chairman FBR stated that the tax has been imposed on digital platforms providing services without retaining physical footprint. The committee granted its clearance for the proposed tax. However, the Senate panel opposed the imposition of Rs2.5 per litre carbon Levy on petrol, diesel, and furnace oil in the budget. The meeting of the Senate Standing Committee on Finance and Revenue was presided over by Senator Saleem Mandviwalla. The Senate panel finalized its recommendations and now an internal meeting of the panel is scheduled to be held on Friday (today) to finalize its report for tabling before the Upper House of parliament for seeking approval and forwarding to the National Assembly next week. Chairman FBR Rashid Mahmood Langrial opposed the special treatment for the banking sector under the Seventh Schedule of the Income Tax Ordinance and recommended that it should be abolished in totality. Why special treatment for the banking sector, he questioned, and added that these banks should be treated like other companies. This triggered a heated debate during the Senate Standing Committee on Finance meeting. The FBR has proposed in the Finance Bill 2025-26 that banks can only claim provisions for non-performing loans as expenses if they are classified as “loss” under the State Bank’s Prudential Regulations. “Why the banks be given totally different tax treatment as compared to other registered companies,” the FBR chairman questioned. Tax laws cannot be dictated to the government by any particular sector, he added. The panel chairman recommended deletion of Special Economic Zone (SEZ) Act keeping in view government policy for not granting or extending tax exemptions. The committee was also briefed on the exemptions provided to businesses located in Khyber Pakhtunkhwa and the newly merged districts. It was informed that the exemptions for cinema operators have been limited till 2030. However, the FBR has extended the facility till 2026. Discussing the power sector’s initiative for payment of circular debt through refinancing, NEPRA officials stated that, as of now, Rs3.23 per unit is being charged to consumers. However, NEPRA proposed removal of 10pc cap limit, as it would help in obtaining necessary refinancing needed for the payment of circular debt.

SBP forex reserves rise by $46m to $11.72bn
The State Bank of Pakistan’s foreign exchange reserves increased by $46 million to $11.722 billion in the week ending June 13, the central bank said on Thursday.

The country’s total liquid foreign reserves rose by $130 million to $17.005 billion. The reserves of commercial banks increased by $83 million to $5.283 billion. The SBP’s reserves continued to increase due to a current account surplus. Inflows from the International Monetary Fund, rollovers from friendly nations, and the SBP’s dollar buying from the market also played a crucial role in bolstering forex reserves.

Pakistan recorded a current account surplus of $1.8 billion during the 11 months of the fiscal year ending in June, in contrast to a deficit of $1.6 billion in the same period last year. However, the country’s current account turned into a $103 million deficit in May from a $47 million surplus in April, driven by higher imports and a decline in exports. The deficit came at $235 million in May 2024.

The SBP forecasts the current account to remain in surplus for fiscal year 2025. However, due to an uncertain global trade environment and a projected strong demand for imports, the current account is expected to shift to a moderate deficit in fiscal year 2026. Despite weak net financial inflows so far, the SBP anticipates that its foreign exchange reserves will increase to approximately $14 billion by the end of June 2025.

Pakistan on Wednesday signed a $1 billion financing for a five-year multi-tranche facility with the Asian Development Bank (ADB). According to the SBP, the total repayment for FY25 amounted to $25.8 billion, most of which has already been paid or rolled over. The remaining $400 million is set to be settled within the next two weeks, with some inflows anticipated this month. It also expects remittances for FY25 to reach $38 billion, an increase from $31.3 billion in the previous year.

5 bidders join race to buy PIA in revived privatisation push
Pakistan’s second attempt to privatise its loss-making national carrier, Pakistan International Airlines Corporation Limited (PIACL), drew interest from eight potential buyers, with five parties submitting their Statements of Qualification (SOQs) by Thursday’s deadline, the Privatization Commission said.

The government had invited Expressions of Interest (EOIs) for the sale of 51 to 100 percent shares of PIACL along with management control. The latest push for privatization comes amid ongoing fiscal pressure and efforts to reform state-owned enterprises.

Among the five parties that submitted SOQs are a consortium led by Lucky Cement Limited, comprising Hub Power Holdings, Kohat Cement, and Metro Ventures; another consortium featuring Arif Habib Corporation, Fatima Fertilizer, The City School, and Lake City Holdings; Airblue Limited; Fauji Fertilizer Company Limited and a group involving Augment Securities, Serene Air, Bahria Foundation, Mega C&S Holding, and Equitas Capital LLC.

While eight groups initially expressed interest in acquiring the national airline, three — including the AKD Group, Habib Rafiq Engineering, and Sardar Ashraf D Baluch Private Limited — did not submit qualification documents by the final date.

The Privatization Commission will now review the SOQs based on predefined eligibility criteria. Shortlisted bidders will be granted access to a virtual data room for due diligence ahead of the bidding phase.

Privatization board clears key steps to offload power companies
Pakistan’s Privatization Commission Board has approved the launch of a formal process to hire financial advisers (FAs) for the privatization of four power distribution companies and two generation plants, signaling a major step forward in opening the loss-making power sector to private investment.

At its meeting, chaired by Prime Minister’s Adviser on Privatization and Commission Chairman Muhammad Ali, the board cleared financial advisory hiring for Hyderabad Electric Supply Company (HESCO), Sukkur Electric Power Company (SEPCO), Peshawar Electric Supply Company (PESCO), and Hazara Electric Supply Company (HAZECO), as well as the 747MW Guddu and 525MW Nandipur power plants.

The board also approved audited financial statements of the commission for fiscal years 2022-23 and 2023-24 and sanctioned its budget estimates for FY-2025-26 to ensure continuity of institutional operations.

Officials briefed the board on progress in ongoing transactions including Pakistan International Airlines Corporation Ltd. (PIACL), the Roosevelt Hotel in New York, and three additional power distribution firms Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO).

Task to finalise increased gas sale price outsourced
In a rare development, the top authorities of the Petroleum Division have outsourced to KPMG, a reputable audit firm, to determine which domestic categories will face a hike in sale gas price from July 1, 2025.

 “This is for the first time that the task of increasing the sale gas price has been given to KPMG. The audit firm would suggest to the government which domestic consumers should face an increase in the sale gas price,” a senior official of the Energy Ministry told The News.

The Oil and Gas Regulatory Authority (Ogra) on May 20, 2025 determined for Financial Year 2025-26 the hike in gas price for consumers of Sui Northern Gas Pipelines Limited (SNGPL) the prescribed price of Rs1895.5 per MMBtu for gas consumers of all categories’ because of the increase in usage of RLNG. However, the regulator decreased the gas price for consumers of Sui Southern Gas Company (SSGC) by Rs103.95 per MMBtu to the prescribed Rs1,658.55 per MMBtu for all consumers.

Under the IMF diktat, the government has to enforce the hike in gas sale price for all consumers across the country ensuring zero shortfall of the Sui gas companies. Sui Northern is facing a shortfall of Rs40 billion, but Sui Southern is in surplus. The government needs to take the required decision for new sale gas price till June 28, 2024 as the said date is the deadline.

The KPMG would soon finalise its recommendation for the government for a hike in sale gas price. The decision would be approved first in ECC and then it will be rectified by the prime minister.

Right now, the cross-subsidy of Rs140 billion is being extended by industrial, commercial, captive power plants, bulk, CNG and high-end domestic consumers to the protected and first four slabs of unprotected gas consumers.

Govt launches National Electric Vehicle Policy
Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan on Thursday officially launched the National Electric Vehicle (NEV) Policy 2025-30 and called it a historic and transformative step in Pakistan's journey towards industrial, environmental and energy reforms.

Speaking at a press conference, Haroon Akhtar Khan stated that the new EV policy was aligned with the prime minister's vision of promoting clean, sustainable and affordable transportation while encouraging the local industry and protecting environment. Transport sector is a major contributor to carbon emissions and "reform in this area is imperative".

The PM aide said that one of the major targets under the policy was to ensure that 30% of all new vehicles sold in Pakistan by 2030 were electric. This transition is projected to save 2.07 billion litres of fuel annually, amounting to nearly $1 billion in foreign exchange savings. Additionally, the policy is expected to reduce carbon emissions by 4.5 million tons and cut health-related costs by $405 million per year.

He announced that an initial subsidy of Rs9 billion had been allocated for fiscal year 2025-26, under which 116,053 electric bikes and 3,171 electric rickshaws would be facilitated. Some 25% of this subsidy is reserved for women to provide them with safe, affordable and eco-friendly mobility.

He said that a fully digital platform had been introduced to ensure transparent online application submission, verification and disbursement of subsidies. Furthermore, the policy outlines the installation of 40 new EV charging stations on motorways, with an average distance of 105 kilometres.

 

Govt pursues Russian investment in mining
Federal Minister for Energy Ali Pervaiz Malik is leading Pakistan's delegation to the St Petersburg International Economic Forum (SPIEF) 2025 from June 18–21, 2025.

According to an official statement issued Thursday, Malik held key meetings on the sidelines of the forum, including one with his Russian counterpart, Sergei Tsivilev, who also chairs the Pakistan-Russia Inter-Governmental Commission (IGC). Both sides discussed avenues for cooperation in energy, connectivity, trade, investment, banking, insurance, mining, and people-to-people exchanges.

Russia expressed strong interest in expanding bilateral cooperation and welcomed the upcoming 10th session of the IGC, scheduled for the second quarter of 2025 in Islamabad.

Malik also met with Alexey Shemetov, First Deputy Director of Rosatom Minerals, and invited the corporation to invest in Pakistan's mining sector, particularly in technology transfer and sharing expertise on enhancing safety and efficiency. Shemetov agreed to explore investment opportunities and submit proposals for collaboration in Pakistan's mining sector.

In a high-level panel discussion titled 'The Responsibility of World Leaders for Mineral Reserves and Production for the Sustainable Development of Global Economy,' Malik presented Pakistan's recent reforms in the mining sector at the SPIEF 2025. He highlighted the newly launched Mining Framework Policy and the completion of the Reko Diq Mine feasibility study as major steps toward creating an investor-friendly environment for sustainable mineral development.

He underscored the successful Pakistan Minerals Investment Forum, held in Islamabad in April 2025, as a turning point for the sector.

"Under the leadership of Prime Minister Muhammad Shehbaz Sharif, Pakistan has undertaken comprehensive reforms to become a top destination for mining investment," said Malik. "Our new policy offers unparalleled opportunities in copper, gold, and critical minerals, while ensuring environmental stewardship and community benefits."

He added that Pakistan has harmonised its legal framework with international standards through consultations with global legal firms. These reforms, he said, would unlock vast mineral resources through responsible development. Pakistan's mineral wealth, he added, is not limited to copper or gold but there are vast reserves of lithium and other rare earth elements.

The minister noted that these initiatives were successfully unveiled at the Pakistan Minerals Investment Forum 2025, which saw strong participation from global mining leaders. He extended a formal invitation to international investors to participate in the next edition of Pakistan's Mineral Investment Forum.

Multiple international mining companies expressed keen interest in participating in Pakistan's minerals forum. The positive engagement reflects growing confidence in Pakistan's reformed mining landscape.

Govt to import sugar after exports
In a paradoxical move, the government on Thursday decided to import 750,000 metric tonnes of sugar after having already exported nearly the same quantity during the current fiscal year — a move that has driven domestic prices sharply higher, benefitting sugar millers.

The move has raised questions over the rationale behind the government's earlier approval of sugar exports, which critics warned would hurt domestic supply and inflate prices.

The new plan includes submitting a policy for the import of 250,000 metric tonnes of raw sugar to the cabinet for approval, while 500,000 metric tonnes of refined sugar have already received in-principle approval, Deputy Prime Minister Ishaq Dar announced via X (formerly Twitter) after chairing his second meeting on the issue in three days.

According to the Pakistan Bureau of Statistics (PBS), the country exported 765,734 metric tonnes of sugar between July and May this fiscal year, earning Rs114 billion. This marks a 2,200% increase in sugar exports compared to the same period last year.

Exporting first and then deciding to import has sparked concerns over the government's contradictory policies and the disadvantageous position imposed on consumers. After exports, domestic sugar prices hit a record Rs190 per kilogram — Rs50 higher than the pre-export price. A Ministry of National Food Security official claimed that there were sufficient stocks and imports are only being considered to lower prices.

As of the latest PBS weekly bulletin, sugar was priced between Rs170 and Rs190 per kilogram across the country.

In March, the government had fixed the retail price of sugar at Rs164 per kilogram — 13% higher than the cap set during the export approval period — allowing millers to enjoy windfall gains in both local and export markets. Dar's committee had negotiated the ex-factory and retail prices of sugar with the Pakistan Sugar Mills Association (PSMA), which has previously been accused of cartel-like behaviour by the nation's antitrust watchdog — the Competition Commission of Pakistan. Despite the agreed rates, the government failed to ensure stable retail prices.

Dar added on Thursday that the Ministry of National Food Security has been instructed to seek the Economic Coordination Committee's (ECC) formal approval for the sugar imports. Currently, the deputy prime minister is making key economic decisions that are later presented to formal forums for ratification.

On Wednesday, Dar also announced a downward revision of the proposed sales tax on solar panel imports — from 18% to 10% — for the upcoming fiscal year, diverging from the initial budgetary proposal.

Finance Minister Muhammad Aurangzeb, meanwhile, is engaged in trade negotiations with the United States — normally the responsibility of the commerce ministry.

The sugar import decision followed a high-level meeting attended by the Minister for National Food Security, Special Assistant to Prime Minister (SAPM) Tariq Bajwa, officials from the Federal Board of Revenue (FBR), the Federal Investigation Agency (FIA), Ministry of Industries and Production, PSMA, and provincial representatives.

Dar reiterated the government's commitment to balancing the interests of both consumers and producers, stressing the importance of making essential commodities affordable and widely available. According to PSMA's presentation at the meeting, average monthly sugar consumption last year was 533,000 metric tonnes, with a total annual consumption of 6.4 million tonnes. In the first half of this fiscal year, monthly consumption showed a negligible increase of 0.003% to 535,016 metric tonnes, totalling 3.5 million tonnes so far. PSMA claims current sugar stocks stand at 2.8 million tonnes — enough to meet demand until November 21 even at the compressed consumption level of 535,000 metric tonnes per month. However, the government's decision to import 750,000 tonnes suggests that either the shortage is more acute than reported or consumption is higher than projected.

Experts had earlier opposed the government's decision to export sugar, fearing that it would jeopardise supply and raise prices for the entire population to benefit a small group of industrialists. The government's control over sugar trade also contradicts its recently adopted free-market agricultural policies.

"Export and import decisions should be left to farmers and market forces, not to selective millers with political influence," said Usama Mela, a Pakistan Tehreek-e-Insaf (PTI) MNA, during a National Assembly Standing Committee on Finance meeting this week.

The PSMA, whose members are direct beneficiaries of the export, also recommended curbing sugar smuggling to neighbouring countries and proposed a tolling policy for importing raw sugar to manage stock shortages. PSMA also suggested starting the crushing season from November 1 —  a proposal that is largely seen as symbolic and may be an attempt to deflect the criticism over the export of sugar. The PSMA stated in the meeting that without duties and taxes the cost of imported sugar was Rs153 per kilogram, which is still Rs37 per kilogram cheaper than the local price bonanza. The millers claimed that the country produced 5.9 million metric tonnes of sugar this year, which was 14% or nearly 1 million tonnes less than the previous crushing season.

 

KHCL seeks LoS extension for $2.5bn Kohala hydropower project till Sept 2027
Kohala Hydro Company Limited (KHCL) has requested an extension of its Letter of Support (LoS) for the $2.5 billion, 1,124 MW run-of-the-river Kohala Hydropower Project until September 30, 2027. The extension is aimed at ensuring the continued establishment of Pakistan’s existing use of water rights under the Indus Waters Treaty (IWT).

In a letter to the Managing Director of the Private Power and Infrastructure Board (PPIB), KHCL CEO Liu Yonggang emphasized that the IWT, signed in 1960 between Pakistan and India with World Bank mediation, grants Pakistan rights to use the waters of the Western Rivers—Indus, Jhelum, and Chenab. Specifically, Article III (1) and (2) of the Treaty affirms Pakistan’s right to utilize the waters of the Jhelum River for hydroelectric power generation.

The IWT outlines the rights and obligations of both countries concerning the use of these rivers. Article III (4), read in conjunction with Annexure D, stipulates that any storage works by India on Jhelum tributaries, where Pakistan has agricultural or hydroelectric use, must be designed to avoid adversely affecting Pakistan’s existing uses.

Payment dispute between CPPA-G, KE remains unresolved
The Power Division has reportedly failed to resolve a dispute over an excess payment of Rs 7.43 billion between the Central Power Purchasing Agency – Guaranteed (CPPA-G) and K-Electric (KE), which has been pending for over a year, sources within CPPA-G told Business Recorder.

In May 2024, the Power Division released Rs 172.8 billion to CPPA-G on account of Tariff Differential Claims (TDC) for KE. In this regard, KE referred to the Power Purchase Agency Agreement (PPAA) between KE and CPPA-G and the Tariff Differential Subsidy Agreement (TDSA) between KE and the Government of Pakistan, both signed in January 2024.

According to KE, since the execution of the PPAA, it has fulfilled its obligations and paid Rs 71.5 billion directly to CPPA-G for power purchases—demonstrating its commitment to enhancing liquidity and sustainability within the power sector. As a result, KE states that there are no outstanding payables to CPPA-G after December 31, 2023.

Discos, KE’s tariffs: CPPA-G seeks up to Rs1.5 negative adjustment

Furthermore, the power utility noted that following the release of the TDC by the Power Division on KE’s behalf, all dues to CPPA-G up to December 31, 2023, have been cleared. In fact, KE claims it made an excess payment of Rs 7.43 billion, which it seeks to be adjusted against future invoices under the PPAA.

KE has requested CPPA-G to issue a credit note of Rs 7.43 billion, to be made directly to KE rather than CPPA-G, in line with the TDS agreement. The utility has sent multiple letters to the Power Division requesting this credit note and seeking that future TDC disbursements related to the post-December 31, 2023 period be released directly to KE, as per the effective TDSA.

Most recently, on June 10, KE sent a letter to Additional Secretary (Power Finance), Mehfooz Bhatti, summarizing previous correspondence and reiterating its demand for a Rs 7.43 billion credit note and direct release of future TDC amounts.

Sources reveal that CPPA-G has shown willingness to issue a credit note of Rs 3 billion to KE, suggesting that the remaining amount be discussed with the Power Division. However, a final decision is still pending, and neither the Power Division nor CPPA-G has shared any update on the matter.

“KE contends that since it is paying the full amount against invoices issued by CPPA-G, a credit should be issued to facilitate proper accounting adjustments,” the sources added.

KE has also requested that the Power Division release the additional amount before June 30, 2025.

For FY 2025-26, the subsidy allocated to KE has been reduced by over 28%—from Rs 174 billion in FY 2024-25 to Rs 125 billion. However, an allocation of Rs 1 billion has been earmarked for agricultural tubewells in Balochistan, up from Rs 500 million in the previous fiscal year.

 

Israel-Iran air war enters second week as Europe pushes diplomacy
Israel and Iran's air war entered a second week on Friday and European officials sought to draw Tehran back to the negotiating table after President Donald Trump said any decision on potential U.S. involvement would be made within two weeks.

Israel began attacking Iran last Friday, saying it aimed to prevent its longtime enemy from developing nuclear weapons. Iran retaliated with missile and drone strikes on Israel. It says its nuclear programme is peaceful.

Israeli air attacks have killed 639 people in Iran, said the Human Rights Activists News Agency. Those killed include the military's top echelon and nuclear scientists. Israel has said at least two dozen Israeli civilians have died in Iranian missile attacks. Reuters could not independently verify the death toll from either side.

Israel has targeted nuclear sites and missile capabilities, but also has sought to shatter the government of Supreme Leader Ayatollah Ali Khamenei, according to Western and regional officials.

"Are we targeting the downfall of the regime? That may be a result, but it's up to the Iranian people to rise for their freedom," Israeli Prime Minister Benjamin Netanyahu said on Thursday.

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Iran has said it is targeting military and defense-related sites in Israel, but it has also hit a hospital and other civilian sites.

Israel accused Iran on Thursday of deliberately targeting civilians through the use of cluster munitions, which disperse small bombs over a wide area. Iran’s mission to the United Nations did not immediately respond to a request for comment.

With neither country backing down, the foreign ministers of Britain, France and Germany along with the European Union foreign policy chief were due to meet in Geneva with Iran's foreign minister to try to de-escalate the conflict on Friday.

"Now is the time to put a stop to the grave scenes in the Middle East and prevent a regional escalation that would benefit no one," said British Foreign Minister David Lammy ahead of their joint meeting with Abbas Araqchi, Iran's foreign minister. I know there has been a lot of speculation amongst all of you in the media, regarding the president's decision making and whether or not the United States will be directly involved.

Russian President Vladimir Putin and Chinese President Xi Jinping both condemned Israel and agreed that de-escalation is needed, the Kremlin said on Thursday.

The role of the United States, meanwhile, remained uncertain. On Thursday in Washington, Lammy met with U.S. Secretary of State Marco Rubio and Trump's special envoy to the region, Steve Witkoff, and said they discussed a possible deal.

Witkoff has spoken with Araqchi several times since last week, sources say. Trump, meanwhile, has alternated between threatening Tehran and urging it to resume nuclear talks that were suspended over the conflict.

Trump has mused about striking Iran, possibly with a "bunker buster" bomb that could destroy nuclear sites built deep underground. The White House said on Thursday Trump would decide in the next two weeks whether to get involved in the war.

That may not be a firm deadline. Trump has commonly used "two weeks" as a time frame for making decisions and has allowed other economic and diplomatic deadlines to slide.

With the Islamic Republic facing one of its greatest external threats since the 1979 revolution, any direct challenge to its 46-year-long rule would likely require some form of popular uprising.

But activists involved in previous bouts of protest say they are unwilling to unleash mass unrest, even against a system they hate, with their nation under attack.

"How are people supposed to pour into the streets? In such horrifying circumstances, people are solely focused on saving themselves, their families, their compatriots, and even their pets," said Atena Daemi, a prominent activist who spent six years in prison before leaving Iran.