The International Monetary Fund (IMF) has urged the caretaker government to improve its power generation system in order to provide relief to Pakistani consumers, while demanding that the government withdraw the subsidy it is providing on gas being supplied to captive power plants (CPPs).

The IMF made this demand during its talks with the Ministry of Finance and the Ministry of Power with regard to providing some relief to the power consumers who are under extreme burden since a phenomenal rise in power bills in July.

According to sources in the Ministry of Finance, the IMF has asked the interim government to immediately raise the price of gas provided to the CPPs with effect from July 2023.

A CPP is an electricity generation facility used and managed by an industrial or commercial energy user for own energy consumption. CPPs can operate off-grid or they can be connected to the electric grid to exchange excess generation.

They said the IMF has outlined five conditions that must be met to grant permission for providing relief to power consumers. It has also asked the government to share a plan with regard to cessation of subsidy and increase in gas price for the captive power plants.

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Sources said the Ministry of Finance has sought time for implementing the IMF’s conditions.

Pakistan is waiting for the IMF’s nod before announcing relief for power consumers

The government approached the lender in recent weeks to secure concessions for electricity consumers who received inflated bills for the month of July which sparked popular protests across Pakistan in which people torched their electricity bills.

Later, the caretaker government sought relief from the IMF, which approved a $3 billion bailout program in July after Pakistan agreed to implement stringent economic reforms, to help people consuming up to 400 units of electricity.

However, the country has still not received the required 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 told a news outlet last week.