Islamabad: The International Monetary Fund (IMF) has turned down Pakistan’s proposal to offer subsidized electricity tariffs to crypto mining firms and selected energy-intensive industries, warning that such concessions would further complicate the country’s already burdened power sector.
The development was revealed during a meeting of the Senate Standing Committee on Power held this week, chaired by Senator Mohsin Aziz. Secretary Power Division Dr. Fakhray Alam Irfan testified before the committee, explaining that all major pricing initiatives in the energy sector now require IMF clearance due to Pakistan’s ongoing reform commitments under the Fund’s program.
Although Pakistan faces surplus electricity—particularly in the winter months—the IMF has expressed concern that discounted rates for specific sectors such as cryptocurrency mining, copper and aluminum smelting, and data centers would distort the market and undermine broader energy sector reforms.
Dr. Irfan stated that while Pakistan had floated the idea of a targeted, marginal cost-based tariff (Rs 22–23 per kWh) for high-energy industries to boost off-peak consumption and reduce capacity payments, the IMF viewed the plan as a sector-specific incentive similar to tax holidays, which have historically led to inefficiencies and market imbalances.
The initial proposal—submitted in November 2024—was an extension of an earlier plan under which the Power Division had suggested a six-month incremental consumption package from October to March at Rs 23 per kWh. After two months of deliberations, the IMF only agreed to a scaled-down three-month version.
“As of now, the IMF has not agreed [to the targeted subsidy],” Dr. Irfan told the committee, adding that the proposal is still under review by the World Bank and other development partners. He emphasized that the government has not withdrawn the plan and remains in discussions to align it with international lenders’ expectations.
The decision comes amid growing global scrutiny of cryptocurrency mining, which is known for its intensive energy use. While some countries have explored using surplus power for such operations, the IMF’s stance suggests that Pakistan must tread carefully to avoid derailing its broader energy sector reforms.
Officials said the government remains committed to exploring viable ways to utilize excess generation capacity without jeopardizing the ongoing structural reforms mandated by the IMF program.
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