IMF unlikely to approve 9 cents/kWh tariff for industrial sector: Energy Minister

March 15, 2024 (MLN): The government’s plan to reduce the power tariff at 9 cents/kWh for industrial consumers will not be approved by the International Monetary Fund (IMF) as the fund is reluctant to subsidize electricity for industries, the Minister for Energy, Dr Musadik Malik stated in an interview with a news channel on Thursday.

During the interview, the minister responded to certain questions regarding the ongoing issues within the power sector and highlighted potential solutions and governmental plans.

The minister stated that the focus is currently on bringing the cost of electricity down as an adequate supply of energy is necessary for economic growth.

However, the main issue regarding the country’s power sector is the rising theft of electricity, which results in a loss of around Rs1 trillion every year.

Resultantly, some distribution companies have experienced losses that are 40% higher, while others manage to keep their losses at a minimum level.

To find an innovative method to at least restrict the cost of electricity from rising, the government has formed a committee that would analyze issues related to DISCOs.

Furthermore, the newly elected prime minister Shehbaz Sharif has urged for improved governance of these power distribution companies.

As stress related to higher electricity charges is rising, the PM has also called for an immediate solution in a couple of weeks, added the minister.

According to Dr Musadik Malik, the Weighted Average Cost of Gas (WACOG) emerges as a glimmer of hope to reduce energy production costs.

He also mentioned that the government came up with a revolutionary dividend plug-in back scheme to make a notable dent in the mounting debt crisis faced by the sector, but the IMF termed it as a book adjustment.

“Our main aim now is to formulate a comprehensive solution to propose to IMF to curb the longstanding burden of circular debt,” he noted.

In addition to the outlook as disclosed in the interview, the minister earlier in a meeting with French officials also emphasized that the new government would approach the IMF with a thoroughly prepared plan to solve the crises of the energy sector.

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