The IMF is concerned over Pakistan's strategy to address the challenges of declining electricity demand due to increased solarisation and surplus imported gas owing to weakened economic demand, according to a media report.
Led by Washington-based mission chief Nathan Porter, an International Monetary Fund (IMF) team arrived in Pakistan for a week to scrutinise the implementation of the three-year USD 7 billion bailout package soon after its approval by the board in September.
On the first day of meetings on Monday, the IMF raised questions about the power sector, focused on plans to manage the solarisation challenge and the surplus imported gas, The Express Tribune newspaper reported, quoting sources.
The meeting was attended by Pakistan's Minister for Power Awais Laghari, Minister of State for Finance Ali Pervaiz Malik, the secretaries of Finance, Power, and Petroleum, and the chairman of the Federal Board of Revenue.
During the meeting, the IMF also raised the issue of reducing electricity demand due to an increasing trend of installing rooftop solar panels as an alternative to highly expensive electricity.
However, the global lender did not get a satisfactory reply to its questions on solar use and urged the energy ministry to take the lead on the matter.
The IMF also asked about the impact of the Punjab government's policy to incentivise solar use, which is contrary to the federal government's policies.
During programme talks in May last year, Pakistan briefed the IMF about soon ending the net metering policy for rooftop solar panels and replacing it with gross metering aimed at selling highly expensive and unaffordable grid electricity to consumers.
Pakistan's middle-class to rich people are converting to solar-based in-house power generation after the cost of electricity has become unaffordable due to highly expensive seller-favoured power purchase agreements, inefficiency of the power system, and uncontrolled theft and leakages.
The issue of about 1000 mmcfd (million standard cubic feet per day) surplus imported gas and Pakistan's commitment to disconnect the gas connection to the in-house power generation plans of the industries also came up for discussions, said the sources.
Under a condition by the IMF, Pakistan is required to disconnect the gas for the in-house power generation plants of the industries by January 2025. There is a strong resentment within the industry about its adverse impact on the cost of doing business.
Pakistan proposed that industries may be allowed to run on imported gas on a full-cost recovery basis. Currently, the government charges about Rs 2,950 per MMBtu (Metric Million British Thermal Unit) for the use of imported gas in captive power plants, which is about Rs 700 less than the market price.
The assessment by the IMF is important for the success of the loan and the economic recovery of Pakistan, which narrowly avoided a default last year with the timely help of the lender.
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