PM Shehbaz Reviews Rs. 1.5 Trillion PSDP, Signals Bigger Tilt Toward Power Transmission Projects
PM Shehbaz has directed reallocation of the Rs. 1.5 trillion PSDP toward well-performing ministries — a category that increasingly favours transmission, grid modernisation, and renewable integration projects.
Prime Minister Shehbaz Sharif on May 18 chaired a review of Pakistan's Rs. 1.5 trillion Public Sector Development Programme (PSDP) for FY2027, directing the Planning Ministry to channel additional funds toward "well-performing" ministries — a category that, according to officials briefed on the meeting, increasingly favours transmission, grid-modernisation, and renewable-integration projects.
What the PSDP review signals
The PM's directive instructs the Planning Commission to reallocate within the Rs. 1.5tn envelope based on FY2026 execution performance. The Power Division, NTDC, and the Alternative Energy Development Board (AEDB) all closed FY2026 with execution rates above 85%, putting them in line for top-up allocations.
The Planning Ministry will finalise the revised allocations by the second week of June, ahead of the FY2027 federal budget presentation.
Power-sector PSDP priorities
- High-voltage transmission — completion of the 765 kV Dasu-Islamabad backbone and the Matiari-Lahore HVDC strengthening to evacuate Thar coal and southern wind capacity.
- Grid station modernisation — upgrades at 220 kV grid stations in KP and Balochistan to handle distributed-generation inflows from net-metered consumers.
- Renewable integration — funding for AEDB's solar-park-cum-storage pilots in southern Punjab and Sindh.
- Tarbela Unit 5 refurbishment — completing the multi-year overhaul to restore lost hydropower output during high-demand summer months.
The execution-vs-allocation gap
Pakistan's PSDP historically suffers from a wide gap between allocation and disbursement — FY2024 allocations released only 64% of approved funds, with infrastructure ministries hit hardest. The PM's "well-performing ministries" framing is explicitly meant to reverse that pattern by rewarding ministries that actually spend approved budgets on time and on scope.
For the power sector, this matters because transmission bottlenecks now constrain output from existing generation: an estimated 1,200–1,500 MW of installed capacity sits stranded on a typical summer day because the grid can't move it from generation point to load centre.
The IMF context
The PSDP review comes against the backdrop of IMF programme conditions that limit Pakistan's overall fiscal envelope. Within that ceiling, transmission upgrades qualify as "growth-enhancing" public investment under the IMF's framework — meaning they can be increased without breaching the deficit target, as long as they replace lower-return spending elsewhere.
Frequently Asked
Questions about this story
How much is the FY2027 PSDP?
Rs. 1.5 trillion in total, with internal reallocation toward well-performing ministries based on FY2026 execution rates.Which power-sector projects are expected to get top-up funds?
765 kV Dasu-Islamabad transmission, Matiari-Lahore HVDC strengthening, grid station modernisation in KP and Balochistan, AEDB solar-storage pilots, and the Tarbela Unit 5 refurbishment.How does transmission spending affect electricity bills?
Transmission CAPEX is recovered through Use-of-System Charges (UoSC) that NEPRA passes through to consumer bills, typically over a 25-year asset life with a regulated return.Does IMF approve this kind of spending?
Yes — transmission upgrades qualify as growth-enhancing public investment under the IMF programme framework, provided they replace lower-return spending elsewhere within the fiscal ceiling.How much stranded generation does Pakistan have?
An estimated 1,200–1,500 MW of installed capacity sits stranded on a typical summer day because the grid can't move it from generation point to load centre — a constraint the PSDP rebalance is meant to address.
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