Electricity Tariff Plan
The International Monetary Fund (IMF) has officially rejected Pakistan’s proposal to introduce subsidized electricity tariffs specifically aimed at crypto mining and select energy-intensive industrial sectors, citing concerns that such targeted subsidies could worsen the already fragile condition of the country’s power sector. This update was shared by Power Secretary Dr. Fakhray Alam Irfan during a Senate Standing Committee on Power session chaired by Senator Mohsin Aziz.
Dr. Irfan informed the committee that any significant reforms in the power sector now require prior approval from the IMF. Although Pakistan currently experiences surplus electricity, especially during the winter months, the IMF remains cautious about tariff structures that could disrupt the energy market’s balance.
The power division had initially proposed a six-month incremental consumption scheme with electricity priced at Rs23 per kilowatt-hour (kWh) in September 2024. However, after two months of negotiations, the IMF approved only a shortened three-month plan, reflecting its concern over market distortions.
In November 2024, the government advanced a plan proposing subsidized tariffs of Rs22–23/kWh for industries such as data centers, copper and aluminum production, and crypto mining to encourage the use of excess electricity and reduce capacity charges.
Despite the potential benefits, the IMF dismissed the plan, equating it to sector-specific tax holidays that have historically caused imbalances in the energy market. Dr. Irfan clarified that while the IMF has not approved the proposal, it is still under review by the World Bank and other international development partners. He emphasized that the government has not withdrawn the plan and is continuing discussions with these institutions.
The committee meeting also featured intense debate surrounding the government’s agreement with commercial banks to manage Rs1.275 trillion of circular debt. Senator Shibli Faraz accused the banks of being coerced into the agreement and warned of future levies that could burden consumers, remarking, “If I were a banker, I would have refused.” Dr. Irfan rejected these allegations, clarifying that no new levies were imposed. He explained that the existing Rs3.23/kWh Debt Servicing Surcharge (DSS) would continue for the next five to six years to repay the loan and that circular debt inflows have been controlled through timely subsidies.
On consumer facilitation efforts, Dr. Irfan noted that over 500,000 users have downloaded the “Apna Meter Apni Reading” mobile app, which allows consumers to submit meter reading photos to prevent overbilling. The app is set to expand its service to K-Electric customers soon.
The committee expressed frustration over the absence of the Federal Minister for Power, who was expected to address pressing concerns regarding Independent Power Producers (IPPs) and inefficiencies in the power sector.
Senator Mohsin Aziz criticized the establishment of certain IPPs as unjust, while Senator Shibli Faraz accused these projects of inflated costs leading to excessive profits. Both senators highlighted the government’s failure to resolve the circular debt crisis, with Senator Faraz stating, “The public is paying for the government’s failures.”
Senators also raised concerns about forced load shedding in districts such as Tharparkar, Matiari, and Umerkot, where power outages reportedly last up to 14 hours daily despite consumers paying their bills. Senator Poojo Bheel alleged local officials accepted bribes to restore illegal electricity connections, depriving law-abiding consumers of their rights.
Dr. Irfan explained that revenue-based load shedding is enforced in areas experiencing over 20% power losses. He cited a recent incident where a SEPCO employee was fatally attacked while conducting a disconnection drive. K-Electric’s Chief Distribution Officer, Sadia Dada, reported that 30% of its 2,100 feeders experience outages due to extensive electricity theft through illegal “kundas” (hooks) in informal settlements. To alleviate consumer burden, K-Electric now offers installment plans for bill payments.
According to Dr. Irfan, 58% of domestic consumers fall under the “protected” category, paying zero electricity rates per unit. The government, with donor approval, will disburse Rs250 billion in power subsidies and is expanding technology-driven measures to curb theft. The meter reading app has attracted over 250,000 registered users so far.
Senator Haji Hidayatullah raised a corruption allegation involving a Rs2.3 million electricity bill in Peshawar, which had already been cleared. He claimed PESCO officials offered to settle it for Rs300,000 — an accusation Dr. Irfan pledged to investigate.
Additionally, the CEO of HAZECO briefed the committee about ongoing challenges in the Lora Chowk Sub-Division, including faulty meters, frequent feeder breakdowns, and project delays.
Following a lengthy session, the Senate Standing Committee expressed dissatisfaction with the Power Division’s responses and directed the department to provide detailed answers at the next meeting.
