The International Monetary Fund (IMF) expressed concerns on Pakistan’s handling of declining electricity demand, which is partly due to the growing use of solar panels and surplus imported gas amid weaker economic demand. These concerns were raised during initial talks to protect Pakistan’s $7 billion bailout.
The IMF questioned how Pakistan plans to manage the impact of increased solar panel adoption, particularly rooftop solar, as well as the excess imported gas. Pakistan proposed allowing industries to continue using imported gas beyond January 2025, provided the cost is fully recovered, but the IMF did not give a clear response. The government had earlier committed to reducing gas supplies to industries by January and shifting them to the national grid, a move that has frustrated business owners due to rising operational costs.
The issue of unpaid Gas Infrastructure Development Cess (GIDC) dues also came up, with the government blaming court stay orders for the lack of recoveries, despite the Supreme Court ruling in 2020 in favor of collecting the dues. These unpaid dues amount to over Rs 400 billion, primarily from the fertilizer and textile sectors, but collection has been slow.
Pakistan also presented the IMF with its plans for addressing the surplus imported gas, amounting to 1000mmcfd, due to low demand. The government suggested charging industries full cost for using this gas. The IMF is closely monitoring Pakistan’s plans and the impact on its circular debt, which has improved with better bill recoveries but mainly due to increased electricity tariffs.
Additionally, Pakistan’s efforts to manage the rising cost of electricity, including the Prime Minister’s winter electricity package, were discussed, though the IMF sought more clarity on its impact. The IMF also emphasized targeted electricity subsidies, particularly for low-income households, while expressing concerns over the feasibility of implementation.
These discussions come as the IMF reviews Pakistan’s compliance with the bailout terms and Pakistan faces increasing energy-related challenges amid a struggling economy.
NEWS DESK
PRESS UPDATE