IMF Establishes Criteria for Alleviating Power Bills

The International Monetary Fund (IMF) has called upon Pakistan’s interim government to enhance its power generation infrastructure as a means to alleviate the burden on Pakistani consumers. Additionally, the IMF has requested the government to withdraw the subsidies currently granted to captive power plants (CPPs) for gas supply.

These demands were made during discussions between the IMF, the Ministry of Finance, and the Ministry of Power, aimed at addressing the distress of power consumers who faced a substantial surge in their electricity bills in July.

According to sources within the Ministry of Finance, the IMF has urged the interim government to promptly increase the gas prices for CPPs, effective from July 2023. Captive power plants, for context, are electricity generation facilities managed by industrial or commercial energy users for their own energy consumption. These plants can operate independently or be connected to the national grid to exchange surplus electricity.

The IMF has presented a set of five conditions that must be met before any relief can be granted to power consumers. Moreover, the IMF has requested that the government furnish a plan outlining the cessation of subsidies and the proposed increase in gas prices for captive power plants.

Officials from the Ministry of Finance have requested additional time to fulfill the IMF’s conditions.

Pakistan has been eagerly awaiting approval from the IMF before announcing relief measures for power consumers. In recent weeks, the government sought assistance from the IMF after widespread protests erupted across the country due to inflated electricity bills for the month of July.

The IMF had previously approved a $3 billion bailout program for Pakistan in July, contingent on the implementation of stringent economic reforms. This program was designed to benefit consumers using up to 400 units of electricity.

However, the necessary permission from the IMF to proceed with these relief measures is still pending. A finance division official stated that Pakistan has proposed various options to the IMF for alleviating the plight of power consumers, but a response is still awaited.

In summary, the IMF’s call for improving the power generation system and withdrawing subsidies for captive power plants is part of ongoing negotiations with Pakistan’s caretaker government to provide relief to consumers burdened by high electricity bills. The government is actively seeking IMF approval to implement these measures.