According to a report from Pakistan Today, the International Monetary Fund (IMF) has rejected Pakistan’s proposal to provide subsidized electricity for a 2,000 MW plan encompassing crypto mining, data centers, and heavy industry on July 3rd. Dr. Fakhray Alam Irfan, informing the Senate Energy Committee, stated that the IMF turned down the proposal due to potential market disruptions. The government aimed to implement this project to utilize the surplus electricity generated in winter and attract foreign investment. IMF’s veto has cast uncertainty over the project’s future.
IMF’s Argument: Distortion of Competitive Environment
A report presented to Senator Mohsin Aziz, leading the committee, indicated that the 2,000 MW capacity was dedicated to energy-intensive sectors such as crypto mining, data centers, and metal production facilities, which would accelerate economic growth.
The IMF team argued that the subsidy would disrupt the competitive landscape and create artificial price differences in tariffs. They warned that such support would reduce efficiency in the long run and increase public financial pressure.
Dr. Irfan stated, “Approval is not given as of now; negotiations continue,” suggesting that the proposal might be revised per international standards and resubmitted.
Actions Taken to Address the Issue
Following the veto, the government has engaged with other financial institutions to redesign the subsidy policy. Currently, 58% of consumers benefit from a discounted tariff of 10 rupees per kilowatt, with a provision of 250 billion rupees allocated for this support in the 2025 budget.
To reduce loss and theft rates, the government aims to spread the use of smart meters and remote monitoring systems. The committee instructed expanding technological measures against electricity theft and preparing a detailed report for the next meeting.
During the meeting, an agreement with banks to reduce the 1,275 trillion rupee circular debt was also discussed. Senator Shibli Faraz alleged that banks were forced to lend and criticized the lack of transparency in the agreement.
