The International Monetary Fund (IMF) has rejected Pakistan’s proposal to offer subsidised electricity tariffs for crypto mining and certain industrial sectors, warning that such measures could further strain the already burdened power sector.
In a session with the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Secretary of Power Dr. Fakhray Alam Irfan outlined the ongoing discussions with the IMF on the matter. He explained that the IMF was concerned about market distortions and declined a proposal to offer subsidised rates to energy-intensive industries, such as crypto mining and metal industries.
The Power Division’s original proposal, presented in September 2024, suggested a six-month tariff package at marginal cost (Rs 23/kWh), but the IMF only approved a three-month version, citing potential negative effects on market balance.
Later, in November 2024, the Power Division proposed a targeted subsidy for these industries to boost consumption of surplus electricity, but the IMF rejected this as well, arguing it resembled sector-specific tax holidays that often cause imbalances in the economy.
Dr. Irfan confirmed that while the proposal had not been accepted by the IMF, the government is still in talks with international institutions to refine the plan.
During the meeting, the committee also discussed the recent agreement with scheduled banks to reduce the circular debt stock of Rs 1.275 trillion. Senator Shibli Faraz criticised the deal, accusing the banks of being “forced” into it and warning that consumers would bear the cost through future levies.
However, Secretary Power Dr. Irfan clarified that no new levies had been imposed, and the existing Debt Servicing Surcharge (DSS) of Rs 3.23/kWh would continue for the next five to six years.
The committee was also briefed on technological solutions aimed at combating electricity theft. Dr. Irfan noted that 58% of consumers fall under the “protected” category, paying Rs 10 per unit, and the government is working on expanding subsidies and digital solutions for theft prevention.
The committee directed the Power Division to submit a detailed report on these issues during the next meeting.
