The International Monetary Fund (IMF) requested that the caretaker government end its subsidy on gas supplied to captive power plants (CPPs) and upgrade its electricity generation system to relieve Pakistani consumers.
To assist the power users who have suffered greatly as a result of a phenomenal increase in power bills in July, the IMF made this demand during discussions with the Ministry of Finance and Power.
IMF has ordered the current government to immediately increase the price of gas provided to CPPs beginning in July 2023, according to sources in the Ministry of Finance.
A CPP is an electricity-generating facility used and managed for energy consumption by an industrial or commercial energy consumer. To exchange excess generation, CPPs can either operate off-grid or be connected to the electric grid.
They said that to allow assistance for power consumers, the IMF has set down five requirements that must be satisfied. Additionally, it has requested that the government disclose a plan for ending the subsidies and raising gas costs for captive power plants.
According to sources, the Ministry of Finance has asked for more time to implement the IMF’s requirements.
Pakistan is awaiting approval from the IMF before giving relief to power users.
In recent weeks, the government approached the lender to ask for concessions on behalf of electricity users who had been hit with inflated bills for July. This led to widespread protests across Pakistan, where people set their electrical bills burning.
Later, the caretaker government requested assistance from the IMF, which granted it in July after Pakistan committed to carry out strict economic reforms. The $3 billion bailout program was approved to assist those using up to 400 units of electricity.
However, the country has yet to acquire the necessary permission.
“Pakistan has shared various options with the IMF on how to provide relief to power consumers, but its response is still awaited,” a finance division official said to a news source last week.