The federal government is pushing to delay the International Monetary Fund’s (IMF) structural benchmark requiring the disconnection of gas supply to captive power plants (CPPs) and transitioning the industrial sector to grid electricity by January 2025. The move comes amid concerns over potential economic and industrial disruptions.
According to a news report, in a high-level meeting chaired by Finance Minister Senator Muhammad Aurangzeb, four federal ministers and senior officials deliberated on seeking a six-month extension for the implementation of the IMF condition. During this period, the government plans to negotiate with the IMF to eliminate the benchmark altogether, sources said.
The Commerce Minister emphasized that cutting gas to CPPs would adversely affect exporters, reducing confidence among global buyers and further shrinking exports. This would negatively impact foreign exchange earnings, employment, and tax revenues. He also raised concerns about grid electricity’s stability and its ability to meet industrial needs without disrupting production processes.
The Petroleum Division argued that maintaining CPP gas supply is essential to protect domestic consumers who benefit from cross-subsidies provided by CPPs and the industrial sector. Without CPP contributions, the gas sector faces potential losses of Rs393 billion, which could further increase gas circular debt.
Power Minister Awais Leghari stated that shifting CPPs to the grid was part of the agreement with the IMF to prioritize efficient national power plants using indigenous gas. However, the transition requires Rs25 billion for grid station installations, which could take over a year to complete.
The finance minister directed the petroleum and power ministries to compile accurate data to strengthen Pakistan’s case for negotiating changes to the IMF program. Discussions with the IMF are ongoing, with further meetings expected before the January 2025 deadline.
Officials acknowledged that failing to secure a revision in the IMF condition could exacerbate gas sector losses, affect industrial output, and increase economic instability.
