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The International Monetary Fund (IMF) is not wrong to say that Pakistan’s power sector subsidy regime needs reform. Any serious policy practitioner knows that the present tariff structure is fiscally expensive, administratively weak, and vulnerable to misuse. But the IMF is wrong in how it has framed the problem, sequenced the solution, and identified the culprit.

Under the Resilience and Sustainability Facility, the government has committed to replacing the budgeted electricity tariff differential subsidy and cross-subsidy system with a targeted subsidy framework for low-income consumers, to be disbursed through the Benazir Income Support Programme (BISP) by the end of January 2027. On paper, this sounds neat. In practice, it risks becoming another exercise where the poor are asked to pay for the sins of the power sector’s political economy.

Firstly, the IMF’s core assumption is analytically weak. It argues that better-targeted subsidies will reduce incentives for higher-income consumers to overconsume electricity. But Pakistan’s protected consumer category is not an overconsumption subsidy. It is a volumetric survival threshold. Consumers with fewer than 200 units are not being encouraged to consume more; they are being forced to consume less.

A household that watches its meter like a patient watches blood pressure, avoids using fans excessively in June, delays ironing clothes, limits refrigeration, and fears crossing the 200-unit line is not overconsuming electricity. It is under-consuming modern energy in a climate-stressed country.

Electricity misuse should be addressed through targeted administrative correction, not blunt subsidy removal.

Secondly, there is no publicly available distributional analysis showing who will lose, who will gain, and by how much once tariff-based subsidies are replaced by BISP-linked transfers.

Electricity poverty is not identical to income poverty. A household may be poor but excluded from BISP. A tenant may pay the bill while the meter is registered in the landlord’s name. A joint family may consume more than 200 units because eight people live under one roof, not because they are affluent. A household with elderly patients, students, or heat-exposed workers may require more electricity than its poverty score suggests. A reform that ignores these realities will look clean in a spreadsheet but cruel on the ground.

Thirdly, yes, there is misuse in the present system. Multiple meter installations are used in some cases to artificially split consumption and remain within protected slabs. This is a genuine governance problem. But misuse should be addressed through targeted administrative correction, not blunt subsidy removal.

The government should use CNIC mapping, premise-level verification, geographic information system tagging, power distribution company audits, smart metering for abnormal consumption patterns, and a “one protected connection per genuine household” principle with due process.

Fourthly, the IMF’s claim that subsidy removal will reduce theft is also questionable. Theft is not primarily a subsidy problem; it is a governance problem. It is linked to weak enforcement, political protection, poor metering, high-loss feeders, and distrust between consumers and distribution companies.

If tariffs rise sharply for vulnerable households while cash transfers are delayed, inadequate, or poorly targeted, the incentive for theft may actually increase. The system may end up producing exactly what it claims to prevent.

Fifthly, the industrial tariff argument deserves more honesty. It is true that cross-subsidies have burdened industry and hurt competitiveness. Pakistan cannot build exports on electricity tariffs that punish production. But the solution is not to remove household protection and merely hope that industrial tariffs will fall.

The government must transparently show how much industry will benefit, which sectors will gain, whether employment will rise, and whether export competitiveness will improve. Otherwise, subsidy removal becomes another policy ritual in which pain is immediate, benefits are promised, and accountability disappears into the fog.

Sixthly, the IMF is silent on the real elephants in the power sector: Independent Power Producers, capacity payments, underutilised plants, expensive contracts, imported fuel exposure, and poor planning. Pakistan’s power purchase cost is increasingly dominated by fixed capacity payments rather than actual energy consumed.

In plain terms, consumers are not only paying for electricity; they are paying for plants that often sit idle. This is the architecture of unaffordable power. Blaming protected consumers for the crisis is like blaming the dinner guest for the mortgage on the banquet hall.

Seventhly, real reform must begin on the cost side. Pakistan needs a transparent audit of generation contracts, capacity obligations, fuel indexation, plant utilisation, dispatch constraints, and transmission bottlenecks. It must renegotiate where possible, refinance where feasible, and retire or repurpose where necessary.

Imported coal and inefficient thermal assets should be considered for early retirement through climate finance, debt reprofiling, and carbon-credit mechanisms. A coal-to-clean strategy can reduce emissions, lower future capacity burdens, protect workers, and convert stranded liabilities into transition assets. If a climate-linked IMF facility cannot support such structural reform, then one may reasonably ask: what exactly is climate finance for?

The verdict is straightforward. Pakistan does need subsidy reform, but not blind subsidy removal. Reform must be evidence-based, distributionally tested, administratively realistic, and socially protective.

The 200-unit consumer is not the villain of Pakistan’s power sector. The real villains are expensive capacity, rigid contracts, weak governance, high losses, and delayed reform. The IMF must stop chasing ants while elephants roam freely in the power room.

The writer has a doctorate in energy economics and serves as a Research Fellow at the Sustainable Development Policy Institute.

Email: khalidwaleed@sdpi.org
X: @Khalidwaleed_

Published in Dawn, The Business and Finance Weekly, May 18th, 2026

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Prime Minister Shehbaz Sharif has termed Pakistan’s emergence as a key mediator between the US and Iran as a “shining moment in our history”, crediting the “political-military partnership” for the change in the country’s image internationally.

The premier made these remarks during an interview with The Sunday Times, as Islamabad remained engaged in efforts for de-escalation between the US and Iran.

“It’s one of the shining moments in our history. Pakistan is acknowledged worldwide as an honest mediator and as a country in which international leadership has full trust and faith. It’s our shining hour, and I feel a very proud Pakistani — as do 240 million Pakistanis,” he was quoted as saying in the interview published on Saturday night.

The PM’s expressed optimism even as military pressure and fears of renewed confrontation continue to shape the conflict that began with US-Israeli strikes on Iran in late February.

While a deal for a complete end to the war is yet to happen, hostilities have largely ceased since the two sides agreed on a Pakistan-brokered ceasefire on April 8. Following the ceasefire, a first round of historic direct US-Iran talks was held in Islamabad on April 11 and 12, with Pakistan playing the role of a mediator. The talks had ended without an agreement, but also without a breakdown.

With challenges in convening a second round, Islamabad continues its peace efforts. The latest development on this front is Interior Minister Mohsin Naqvi’s visit to Iran, where he has held meetings with Iranian President Masoud Pezeshkian and Parliament Speaker Bagher Ghalibaf.

Diplomatic sources said the visit was linked to Pakistan’s continuing efforts to revive the stalled Iran-US peace process after President Donald Trump rejected Tehran’s latest response to American proposals.

In his interview with The Sunday Times, PM Shehbaz said he was “hopeful” of a second round of direct talks between the US and Iran, leading to lasting peace.

“By a stroke of good luck, we have been placed in this prestigious position,” he said.

“Fortunately, Iran trusts Pakistan as does the US administration — and also the Gulf states — and I’m grateful to Presidents Trump and Pezeshkian for accepting our invitation,” he added.

The PM said Pakistan’s efforts for peace were ongoing, adding that “peace is never won easily”.

“You have to have patience, sagacity and ability to move things despite the most difficult challenges.

“As we speak, we’re still doing our best to ensure that this peace effort achieves a long-lasting peace through another session here in Islamabad, and we are hopeful that will happen,” he said.

He further noted, “Our international image has completely changed through this partnership of our political and military hierarchy.”

The premier went on to praise Chief of Defence Forces and Chief of Army Staff Field Marshal Asim Munir, saying: “What we are seeing is team efforts of the political and military leadership. I must acknowledge that the Field Marshal has played a critical role, which will be recorded in history.”

He also commended the efforts of Deputy Prime Minister and Foreign Minister Ishaq Dar, who he said had been “engaging his counterparts and making untiring efforts”.

He was also asked recent border tensions between Pakistan and Afghanistan, and reports of civilians’ killing in Afghanistan in attacks by Pakistan — an allegation that Islamabad has denied.

In his reply, PM Shehbaz said, “Our country is facing an onslaught of terrorism again despite our best efforts — whether it’s from Kabul, the TTP, the BLA and other externally sponsored proxies.”

He added, “With Afghanistan, we had no other choice but kinetic action against terrorist hideouts and support infrastructure. We have lost hundreds of police and soldiers. What do you do? We sent peaceful messages to Kabul, telling them we have to stay neighbours forever, we share a boundary spanning over 2,000km and that if there is peace, there will be prosperity for both of us.

“Those messages have been conveyed to Kabul not once but dozens of times. Our only demand was that they commit not to let those terrorist outfits operate from Kabul.”

The PM further stated, “What should we do? Have lunch or dinner with them while our innocent people are being killed? It’s our unwavering commitment to wash the stigma of terrorism from the face of this country. It’s a war we are fighting not just for Pakistan but the world over.”

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QUETTA: The Balochistan government on Sunday imposed Section 144 across the province for a month.

In a notification available with Dawn, the provincial government imposed a complete ban on gatherings of five or more than five persons, including sit-ins, processions, or rallies throughout the province for 30 days, effective immediately.

The ban also extended to covering faces in public places, “particularly through the use of mufflers, masks, or any other means that obstruct identification”, as well as the display or use of weapons, pillion riding, tinted glasses on vehicles and using unregistered motorcycles.

In light of the development, Special Assistant to the Home Department Babar Khan Yousafzai, in a statement, said that security had been placed on high alert.

“If Fitna-al-Khawarij and Fitna-al-Hindustan make any attempt of any misadventure, they will be met with full force,” he said, adding that security forces remained ready to thwart such attempts and all institutions remained on high alert.

The state uses the term Fitna-al-Khawarij for terrorists associated with the proscribed Tehreek-i-Taliban Pakistan, while Fitna-al-Hindustan is used for Balo­chistan-based terrorist groups.

It should be mentioned that on Wednesday, five soldiers, including a major-ranked officer, were martyred during an area sanitisation operation in Balochistan’s Barkhan district.

In April, nine people working at a copper and gold project site in Chagai district were killed in an armed attack by unidentified assailants, according to officials.

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WASHINGTON: The United States is entering a period of structurally higher industrial natural gas demand, with consumption expected to remain at record levels through at least 2027, even as the Iran war intensifies disruptions across global oil markets and tightens energy supplies worldwide.

According to the latest Short-Term Energy Outlook (STEO) from the US Energy Information Administration (EIA), industrial natural gas consumption in the United States averaged a record 23.6 billion cubic feet per day (bcfd) in 2025, exceeding the previous high of 23.4bcfd recorded in 2023.

The projections suggest that rising industrial demand is no longer merely cyclical, but increasingly tied to deeper structural shifts in manufacturing, energy trade flows and global supply-chain realignment.

The EIA expects industrial gas consumption to rise by another 1.2 per cent, or 0.3bcfd, in 2026, followed by an additional 1.7pc increase, or 0.4bcfd, in 2027.

At the centre of the trend is sustained expansion in energy-intensive manufacturing sectors, including petrochemicals, fertilizers, metals processing and export-oriented industrial production. These industries continue to benefit from the United States’ relative energy cost advantage compared with Europe and parts of Asia, where fuel prices remain significantly higher.

However, the pace of growth is being moderated by ongoing efficiency improvements across industrial operations.

“Continued efficiency improvements reduce the amount of natural gas needed per unit of output,” the EIA noted, indicating that overall demand growth would likely have been substantially higher without technological gains in industrial energy use.

Iran war intensifies pressure on global oil markets

The revised US energy outlook comes amid escalating geopolitical tensions in the Middle East, where the Iran war has evolved into one of the most significant threats to global energy security in recent years.

The EIA this week sharply revised its assumptions for global oil supply disruptions, warning that interruptions to Middle Eastern exports are likely to be both deeper and more prolonged than previously anticipated.

Central to the disruption is the Strait of Hormuz, the world’s most strategically important oil transit chokepoint, through which roughly one-fifth of globally traded crude oil normally passes.

The agency now assumes the strait will remain effectively closed through the end of May, extending earlier expectations that disruptions would ease by April.

That revision significantly alters the global supply outlook.

According to the EIA, approximately 10.5 million barrels per day (mbpd) of oil production was shut in across the Middle East in April. The agency now expects disruptions to rise further to 10.8mbpd this month as regional storage facilities approach capacity limits.

The latest figures also reflect expectations that Iran will face additional export constraints as the US blockade continues to disrupt shipping routes through the Strait of Hormuz.

Notably, the updated estimates are substantially higher than the EIA’s earlier forecast, which projected peak supply losses of 9.1mbpd in April.

Inventory drawdowns signal sustained tightness

The widening supply deficit is expected to accelerate the depletion of global oil inventories, reinforcing expectations that energy markets could remain tight well beyond the immediate geopolitical crisis.

The EIA now forecasts global oil stockpiles will decline by 2.6mbpd this year — a dramatic upward revision from its earlier estimate of roughly 300,000 bpd.

Such a rapid inventory drawdown suggests the market is increasingly relying on stored crude to offset supply shortages, a dynamic that historically amplifies price volatility and raises the risk of sustained inflationary pressure.

The tightening global market is already feeding directly into the US energy system.

According to the EIA, inventories of crude oil, gasoline and distillates in the United States have all fallen sharply as domestic producers increase exports to compensate for supply shortages abroad.

Distillate inventories — including diesel and heating oil — recently fell to their lowest levels since 2005, highlighting the strain on refined fuel markets.

Although US refineries are operating at elevated utilisation rates, domestic fuel supplies remain constrained because of exceptionally strong overseas demand for refined petroleum products.

During the week ending May 1, US petroleum product exports reached 8.2mbpd, including gasoline, diesel and jet fuel. That figure was more than 1.5mbpd higher than the same period last year.

US emerges as shock absorber for global energy markets

The data increasingly point to the United States functioning as the primary stabilising supplier in global energy markets.

As disruptions in the Gulf region remove crude supplies from international markets, global consumers are relying more heavily on US crude exports, refined fuels and liquefied natural gas.

That dynamic is strengthening revenues and export opportunities for American energy producers, particularly natural gas suppliers and refiners. However, it is also creating domestic economic trade-offs.

Higher export volumes are tightening US fuel availability and contributing to rising gasoline and diesel prices for American consumers, adding to broader inflationary pressures across transportation, manufacturing and household energy costs.

The situation also underscores a growing divergence between the oil and natural gas sectors.

While oil markets remain vulnerable to geopolitical disruptions because of concentrated supply routes in the Middle East, the United States’ large domestic natural gas reserves continue to provide relative supply stability. That advantage is increasingly reinforcing the role of natural gas as both an industrial feedstock and a strategic energy buffer during periods of global oil-market instability.

Analysts say that if instability in the Gulf persists, the global energy system could experience a longer-term reconfiguration of trade flows, with the United States assuming an even larger role in supplying both natural gas and refined fuels to international markets.

In that scenario, elevated energy prices, stronger US export demand and structurally higher industrial gas consumption may become defining features of the global energy landscape over the next several years.

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A driver injured seven people, four of them badly, when he drove on a sidewalk in the northern Italian city of Modena on Saturday and then got out possibly holding a knife, the mayor said.

Early eyewitness accounts said the driver, aged in his 30s, apparently “aimed for the sidewalk, hitting a bike, then crashed while slamming head-on into a woman, badly hurt with both legs crushed”, mayor Massimo Mezzetti told local media and the ANSA news agency.

The car then crashed into a shop window.

“He was seen with a knife in his hand, but he didn’t manage to stab anyone.

It seems like he was trying to hit someone,” the mayor said.

Police have arrested the driver and are questioning him, he added.
Mezzetti told RaiNews channel that four of the seven hit had been seriously injured.

One witness told Italian broadcasters the car had arrived at high speed on Emilia Centro street, which is very busy on Saturday afternoons.

“I heard impacts and I saw people getting run over, ” he said.

“The car got to me and I managed to throw myself to the ground,” said the man, whose head was bloodied.

“The driver seemed to be high or drunk, he didn’t seem to be in a normal state. ” He and several other pedestrians chased him down when he tried to run off, disarming him after he produced a knife, he added.

The mayor, Mezzetti, thanked “those citizens who showed courage and civic duty”.

He added: “We need to understand what’s behind this act. But it was a dramatic event.

“I am deeply shaken. Whatever it was, it was extremely serious. If it turns out to be an attack, that would be even more serious,” Mezzetti said.

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• Decision comes in response to traders’ protests, appeals by shopping malls association and general public
• Lahore Chamber of Commerce welcomes move, describes it as ‘important business-friendly’ step
• Khyber Pakhtunkhwa governor, CM resolve to ease restrictions in their province as well

LAHORE: Responding to traders’ protests and appeals by the shopping malls association and general public to revise 8pm business closure timings, the Punjab government has granted partial relief and lifted the restriction on market timings until June 1.

The Punjab Services and General Administration Depa­r­tment’s (S&GAD) Impleme­ntation and Coordination Wing on Friday notified that “all the shops, markets, shopping malls, hotels, restaurants and food outlets are exempted from the prescribed closure timings till June 1, 2026”.

On April 6, the federal government announced that all markets across the country, barring Sindh, would close by 8pm throughout the week as part of energy conservation measures amid a global fuel crisis triggered by the US-Israeli war on Iran.

Complying with the federal government’s decision, Punjab announced that all shops, markets, and shopping malls would close at 8pm, while hotels, restaurants, and food outlets would shut at 10pm, including on Saturdays and Sundays.

However, the government had exempted pharmacies, medical stores, medical supply stores, medical laboratories and hospitals from the order of early closure.

Similarly, petrol pumps, CNG stations, as well as tandoors, bakeries and milk/dairy shops were exempt from the closure order.

Even though restaurants and food outlets were required to shut by 10pm, there were no restrictions on takeaway and home delivery services.

While the Punjab government ordered that all marriage halls and wedding functions, including those organised at residences and farmhouses, shall be closed by 10pm, the latest notification did not explain the status of their closure timings.

The decision had drawn a strong reaction from the traders and public alike as they found that 8pm closure timings for markets were highly detrimental.

Considering the ongoing hot weather and the prevalent shopping and dining culture, the traders and public believed that the 8pm and 10pm timings for markets and food outlets, respectively, were too short.

People also contested that those reaching home from their offices by 6pm could not then shop at any market that was closing by 8pm.

Traders and other stakeholders also argued that the government should explain how much energy was being saved through these measures.

The traders had also been complaining about the alleged high-handedness of the Punjab Enforcement and Regulatory Authority (Pera) officials, who were sealing shops that remained open even a minute after 8pm and imposing fines on their owners.

LCCI welcomes relief

Due to the continuous and effective efforts and strong demands of the Lahore Chamber of Commerce and Industry, the Punjab government has taken an “important business-friendly” decision to ease lockdown restrictions and grant exemptions to markets, shopping malls, restaurants, and food outlets, according to a statement issued by the LCCI.

“This decision is being widely welcomed by the business community as a major relief and a positive step towards economic recovery,” it added.

“It is expected to ensure the continuity of commercial activities, protect jobs, and contribute to overall economic stability.”

The statement further noted that the “decision is being seen as a result of continuous dialogue and constructive engagement”, during which the LCCI “highlighted the real challenges faced by businesses and proposed workable solutions”.

On this occasion, the LCCI president appreciated the Punjab government for this step, the statement said.

He further said restrictions on business hours and lockdown measures directly affected the economy, as they not only impacted businesses but also placed millions of jobs at risk.

“In this context, the decision of the Punjab government is a responsible and pro-economy move,” the statement quoted him as saying.

Easing curbs in KP

Khyber Pakhtunkhwa Governor Faisal Karim Kundi and Chief Minister Sohail Afridi on Friday agreed to ease lockdown restrictions in the province to facilitate the public and support economic activities.

During a telephonic conversation, Mr Kundi proposed lifting lockdown restrictions along the lines of Punjab and suggested exempting shops, markets, shopping malls, and restaurants from the restrictions.

The chief minister agreed with the proposal and both leaders discussed measures aimed at balancing public convenience with economic stability.

Governor Kundi said the relaxation in business hours for shops, markets, and shopping malls would help reduce the financial losses being faced by the trader community.

Both leaders agreed to adopt a joint strategy to promote economic activities and ensure maximum public facilitation.

With input from APP

Published in Dawn, May 16th, 2026

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The federal government on Friday reduced petrol and diesel prices by Rs5, according to a notification issued by the Petroleum Division.

According to the notification, the revised prices will take effect from May 16.

Following the decrease, the price of petrol stands at Rs409.78 per litre and that of HSD at Rs409.58.

Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of the middle and lower-middle class. High-speed diesel is mainly used in the heavy transport sector and for large generators.

The government has been revising petroleum prices every week on Friday night following the now-paused US-Israeli war on Iran, which began on February 28. The war also led to a global fuel crunch caused by the closure of the Strait of Hormuz, through which one-fifth of the world’s supply of oil and gas used to pass in peacetime.

Last week, the government approved a hike of Rs14.92 per litre in petrol and Rs15 on HSD prices.

After the US-Israeli war on Iran began, the government initially hiked petrol and diesel prices by Rs55 per litre on March 6 and announced unprecedented austerity measures on March 9.

In the following weeks, PM Shehbaz said he had rejected recommendations to increase fuel prices despite an increase in the global market on three occasions.

But on April 2, Petroleum Minister Ali Pervaiz Malik and Finance Minister Muhammad Aurangzeb announced an unprecedented increase of 43 per cent and 55pc in the prices of petrol and high-speed diesel, respectively. The ministers had also announced a targeted fuel subsidy programme.

However, just a day later, PM Shehbaz slashed the petroleum levy by Rs80 per litre and brought the price of petrol down to Rs378 per litre.

On April 10, PM Shehbaz further decreased diesel prices and petrol prices by Rs135 and Rs12 per litre, respectively.

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