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Business Recorder
03-07-2025
- Business
- Business Recorder
Crypto mining, other sectors: IMF rejects Pakistan's subsidised power tariffs proposal
ISLAMABAD: The International Monetary Fund (IMF) has rejected Pakistan's proposal to offer subsidised electricity tariffs to crypto mining and certain industrial sectors, warning that such moves would create new complications in the already strained power sector. Testifying before the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Secretary Power Dr Fakhray Alam Irfan stated that all major power sector initiatives must be cleared by the IMF. He noted that although Pakistan has surplus electricity, particularly in winter months, the IMF is cautious about any pricing mechanisms that could distort the market. In September 2024, the Power Division proposed a six-month incremental consumption package (October–March) at marginal cost (Rs 23/kWh), based on last year's usage. However, after two months of discussion, the IMF only approved a three-month version, citing potential market distortions. The curious case of Bitcoin mining in Pakistan In a subsequent plan shared in November 2024, the Power Division suggested a targeted marginal cost-based package (Rs 22–23/kWh) for energy-intensive industries such as copper and aluminium melting, data centers, and crypto mining, arguing it would boost consumption of surplus electricity and reduce capacity charges. Still, the IMF rejected the proposal, stating it resembled sector-specific tax holidays that have historically created imbalances. 'As of now, the IMF has not agreed,' Dr Irfan confirmed, adding that the plan is also under review by the World Bank and other development partners. He emphasised that the government has not withdrawn the proposal and remains engaged with international institutions to refine it. During the session, a heated debate also emerged on the government's recent agreement with scheduled banks to reduce the circular debt stock of Rs 1.275 trillion. Senator Shibli Faraz criticised the deal, stating that banks were 'forced at gunpoint' to offer the loans. 'If I were a banker, I would have refused,' he said, warning that the burden would fall on consumers through future levies. Secretary Power rebutted this claim, clarifying that no new levies have been imposed. He stated that the existing Debt Servicing Surcharge (DSS) of Rs 3.23/kWh will continue for the next five to six years to recover the amount. He also highlighted that circular debt inflows have been reduced through timely subsidy injections. On consumer facilitation, Dr Irfan reported that over 500,000 people have downloaded the 'Apna Meter Apni Reading' app, allowing users to upload photos of their meter readings to potentially reduce inflated billing. He said the app will soon be extended to K-Electric (KE) users. The committee also expressed displeasure over the absence of the Federal Minister for Power, who was expected to answer questions on Independent Power Producers (IPPs) and sectoral inefficiencies. Senator Mohsin Aziz said the establishment of certain IPPs was an injustice and questioned why excess profits have not been recovered. Senator Shibli Faraz alleged that inflated project costs were used to justify higher returns, adding that no real steps have been taken to curb the circular debt crisis. 'The public is bearing the burden of government inefficiencies,' he said. Senators raised concerns about forced load shedding, especially in areas like Tharparkar, Matiari, and Umerkot, where daily outages last up to 14 hours, despite consumers paying their bills. Senator Poojo Bheel accused local officials of corruption, claiming they take bribes for illegal connections and restore disconnected supplies for a 'fee'. He emphasised that even paying customers are facing denial of their rights due to systemic failure. In response, Dr Irfan explained that revenue-based load shedding occurs in areas with losses exceeding 20%, citing a tragic case where a SEPCO employee was fatally stabbed during a disconnection drive. KE's Chief Distribution Officer Sadia Dada said that out of 2,100 feeders, about 30% face load shedding due to high electricity theft, often through Kundas (illegal hooks) in informal settlements. She said consumer bills are now offered in instalments to ease payment difficulties. Dr Irfan stated that 58% of consumers fall under the 'protected' category, paying Rs 10 per unit. With the approval of international partners, the government will allocate Rs 250 billion in subsidies, while also rolling out more tech-based solutions for theft control. So far, 500,000 people have downloaded the meter reading app, with 250,000 registered users. Senator Haji Hidayatullah raised an over-billing case involving a Rs 2.3 million charge on a property in Peshawar that had already been cleared by PESCO. He claimed PESCO officials offered to settle the bill for Rs 300,000, calling it blatant corruption. The Secretary Power assured that the matter will be investigated. The CEO of HAZECO also briefed the committee on issues in Sub-Division Lora Chowk, including estimated billing, feeder faults, and pending ELR work under release numbers 46241, 51911, and 51910. Following extensive deliberations, the committee expressed displeasure at the Power Division's repeated deflection of questions and directed the department to submit comprehensive answers at the next meeting. Copyright Business Recorder, 2025
Express Tribune
03-07-2025
- Business
- Express Tribune
Power Division grilled over IPP costs, circular debt
During the rallies and sit-ins, the residents raised slogans against the government and Power Division. PHOTO: FILE The Senate Standing Committee on Power on Wednesday grilled the Power Division over its failure to provide clear answers on the cost and efficiency of the IPPs, the unchecked rise in circular debt and persistent electricity load-shedding during peak summer months. The committee, chaired by Senator Mohsin Aziz, expressed strong dissatisfaction with the Power Division's lack of transparency. "We asked for a global comparative analysis of IPP power plants over a year ago, but no data has been shared," Senator Aziz said. He lamented the division's continued reluctance to share heat efficiency figures, calling the IPP arrangements unjust from the outset. Senator Shibli Faraz lambasted the Power Division for dodging questions. "Over the past four years, we've received no clear answers. These projects were the result of collusion. Costs were artificially inflated to increase profits, not due to genuine investment. This has crippled our economy and burdened generations," he said. He condemned the ongoing use of bank loans to settle circular debt, saying, "We celebrate borrowing like it's a success story". Faraz also stressed that the Power Division must stop hiding behind task forces and face parliamentary scrutiny head-on. Responding to criticism, Power Secretary Rashid Mahmood Langrial explained that circular debt payments were now linked to existing debt-servicing surcharges and assured the committee that no new financial burden would be passed onto consumers. He defended the government's decision to reduce electricity subsidies, saying it helped control the circular debt. Langrial admitted that certain IPPs had been granted excessive rates of return and said, "We have already recovered an additional Rs30 billion in excess profits from IPPs earned through fuel and O&M margins."
Business Recorder
02-07-2025
- Business
- Business Recorder
Crypto mining, other sectors: IMF rejects subsidised power tariffs proposal
ISLAMABAD: The International Monetary Fund (IMF) has rejected Pakistan's proposal to offer subsidised electricity tariffs to crypto mining and certain industrial sectors, warning that such moves would create new complications in the already strained power sector. Testifying before the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Secretary Power Dr Fakhray Alam Irfan stated that all major power sector initiatives must be cleared by the IMF. He noted that although Pakistan has surplus electricity, particularly in winter months, the IMF is cautious about any pricing mechanisms that could distort the market. In September 2024, the Power Division proposed a six-month incremental consumption package (October–March) at marginal cost (Rs 23/kWh), based on last year's usage. However, after two months of discussion, the IMF only approved a three-month version, citing potential market distortions. The curious case of Bitcoin mining in Pakistan In a subsequent plan shared in November 2024, the Power Division suggested a targeted marginal cost-based package (Rs 22–23/kWh) for energy-intensive industries such as copper and aluminium melting, data centers, and crypto mining, arguing it would boost consumption of surplus electricity and reduce capacity charges. Still, the IMF rejected the proposal, stating it resembled sector-specific tax holidays that have historically created imbalances. 'As of now, the IMF has not agreed,' Dr Irfan confirmed, adding that the plan is also under review by the World Bank and other development partners. He emphasised that the government has not withdrawn the proposal and remains engaged with international institutions to refine it. During the session, a heated debate also emerged on the government's recent agreement with scheduled banks to reduce the circular debt stock of Rs 1.275 trillion. Senator Shibli Faraz criticised the deal, stating that banks were 'forced at gunpoint' to offer the loans. 'If I were a banker, I would have refused,' he said, warning that the burden would fall on consumers through future levies. Secretary Power rebutted this claim, clarifying that no new levies have been imposed. He stated that the existing Debt Servicing Surcharge (DSS) of Rs 3.23/kWh will continue for the next five to six years to recover the amount. He also highlighted that circular debt inflows have been reduced through timely subsidy injections. On consumer facilitation, Dr Irfan reported that over 500,000 people have downloaded the 'Apna Meter Apni Reading' app, allowing users to upload photos of their meter readings to potentially reduce inflated billing. He said the app will soon be extended to K-Electric (KE) users. The committee also expressed displeasure over the absence of the Federal Minister for Power, who was expected to answer questions on Independent Power Producers (IPPs) and sectoral inefficiencies. Senator Mohsin Aziz said the establishment of certain IPPs was an injustice and questioned why excess profits have not been recovered. Senator Shibli Faraz alleged that inflated project costs were used to justify higher returns, adding that no real steps have been taken to curb the circular debt crisis. 'The public is bearing the burden of government inefficiencies,' he said. Senators raised concerns about forced load shedding, especially in areas like Tharparkar, Matiari, and Umerkot, where daily outages last up to 14 hours, despite consumers paying their bills. Senator Poojo Bheel accused local officials of corruption, claiming they take bribes for illegal connections and restore disconnected supplies for a 'fee'. He emphasised that even paying customers are facing denial of their rights due to systemic failure. In response, Dr Irfan explained that revenue-based load shedding occurs in areas with losses exceeding 20%, citing a tragic case where a SEPCO employee was fatally stabbed during a disconnection drive. KE's Chief Distribution Officer Sadia Dada said that out of 2,100 feeders, about 30% face load shedding due to high electricity theft, often through Kundas (illegal hooks) in informal settlements. She said consumer bills are now offered in instalments to ease payment difficulties. Dr Irfan stated that 58% of consumers fall under the 'protected' category, paying Rs 10 per unit. With the approval of international partners, the government will allocate Rs 250 billion in subsidies, while also rolling out more tech-based solutions for theft control. So far, 500,000 people have downloaded the meter reading app, with 250,000 registered users. Senator Haji Hidayatullah raised an over-billing case involving a Rs 2.3 million charge on a property in Peshawar that had already been cleared by PESCO. He claimed PESCO officials offered to settle the bill for Rs 300,000, calling it blatant corruption. The Secretary Power assured that the matter will be investigated. The CEO of HAZECO also briefed the committee on issues in Sub-Division Lora Chowk, including estimated billing, feeder faults, and pending ELR work under release numbers 46241, 51911, and 51910. Following extensive deliberations, the committee expressed displeasure at the Power Division's repeated deflection of questions and directed the department to submit comprehensive answers at the next meeting. Copyright Business Recorder, 2025
Business Recorder
16-06-2025
- Business
- Business Recorder
Finalisation of Finance Bill 2025: Senate panel asks FBR to stay out of provinces' domain
ISLAMABAD: The Senate Standing Committee on Finance and Revenue, Monday, warned the Federal Board of Revenue (FBR) to remain out of the domain of provinces during finalisation of the Finance Bill 2025-26. The meeting chaired by Senator Saleem Mandviwalla, held its fourth consecutive session in the Parliament House, to review the Finance Bill, which includes the Annual Budget Statement presented to the Upper House on June 10 under Article 73 of the Constitution. Mandviwalla warned that the FBR should not enter into the domain of provinces by including services in different provisions of the Finance Bill 2025-26. Sindh Revenue Board (SRB) has submitted different observations on Finance Bill 2025-26 where the FBR has illegally entered into the domain of services, he added. FBR Member Inland Revenue (Policy) Dr Najeeb Ahmad informed that the gradual withdrawal of sales tax exemption from erstwhile tribal areas in phase-wise manner has been agreed between the International Monetary Fund (IMF) and the Federal Board of Revenue (FBR). Budget FY2025-26: Sindh announces to expand sales tax to all major services The committee examined the tax exemption policy for FATA/ PATA, which will begin phasing out with a 10 per cent GST in the next fiscal year— gradually increasing to 18 per cent. The FBR Member said that this two-stage process has been agreed with the IMF for the withdrawal of sales tax exemption on erstwhile tribal areas. Senator Shibli Faraz asked what tangible benefits have tax exemptions brought to these regions. Where is the investment and employment, he asked. The finance minister is scheduled to brief the committee on this issue in the next session. The meeting was attended by Finance Minister Muhammad Aurangzeb, Senators Farooq Hamid Naek, Syed Shibli Faraz, Anusha Rehman Ahmad Khan, Mohsin Aziz, Ahmed Khan, Manzoor Ahmad, Mohammad Abdul Qadir, and senior officials from the FBR and other key departments. Opening the session, Chairman Mandviwalla lauded the 'diligence and active presence' of the federal minister for finance, stating: 'The minister's consistent participation and valuable input during these sessions reflect the government's commitment to transparent fiscal reforms.' Senator Anusha Rehman raised critical points about the regulation of e-commerce platforms emphasising not to burden unemployed individuals specifically (youth and women) making ends meet from home. Only register platforms doing business above Rs20million. On the proposed e-billing system, Senator Mohsin Aziz noted, 'Malaysia began phased implementation three years ago. We must assess our readiness.' Chairman Mandviwalla acknowledged the valuable suggestions of Senator Mohsin Aziz and Senator Anusha Rehman, stating to bring written proposals for phased implementation of e-billing. 'Talking will not suffice.' The committee also discussed the Islamabad Capital Territory (Tax on Service) 2001, Provisions of the Finance Bill, 2005. It was discussed that as per the IMF benchmark 'negative list of services' should also be developed. While discussing the Public Finance Management Act, 2019 a major disclosure rocked the session, revealing billions held and invested by public sector entities which are not transferred to central treasury but invested by these entities for profit. Senator Anusha Rehman condemned this, stating the government is borrowing its own money from banks and paying interest, while institutions profit off public funds. The committee directed the Establishment Division and Ministry of Finance to submit complete account details of all such institutions, lists of investments and profits earned, legal basis for withholding funds from the national treasury. The committee, while discussing the Federal Excise Provisions of Finance Bill, 2025, approved abolishing federal excise duty (FED) on first purchase of immovable property. The Senate Committee will reconvene Tuesday with the finance minister scheduled to address tax exemption policies and provide further clarity on institutional financial practices. Copyright Business Recorder, 2025
Business Recorder
24-05-2025
- Business
- Business Recorder
Less hydel output: Generation mix changes may affect rebased tariff: Nepra
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday said that impact of change in generation mix due to less hydel generation is expected to effect the proposed rebasing tariff for the fiscal year 2025-26. Testifying before Senate Standing Committee on Power, presided over Senator Mohsin Aziz, Nepra Chairman Waseem Mukhtar said since there is substantial decrease in rains in the country, it will alter the projected generation mix for next fiscal year, which implies that whatever relief was expected for next year, will not be available. The standing committee was apprised that current relief of Rs 7.41 per unit is available to consumers from April 2025, of which the impact of revision or termination of agreements is around Rs 1.81 per unit, QTA Rs 2.37 per unit, FCA Rs 1.12 per unit and Rs 2.12 per unit due to raising the Petroleum Levy will continue but relief under QTAs and FTAs is subject to economic conditions of the country and the price of fuel in the international market. Hydel reduction forecast: Nepra seeks generation plan from PD Minister for Power, Awais Leghari informed the committee that he has held a meeting with the Finance Minister on deduction of provinces reconciled amounts. Currently an amount of Rs 161.472 billion is outstanding against provinces but no province is ready for reconciliation except Punjab. Of total receivables of Rs 161.472 billion, share of Punjab is Rs 41.832 billion, Sindh, Rs 67.960 billion, Balochistan, Rs 41.600 billion and KP, Rs 10.080 billion. The minister expressed anger at the absence of senior officials from PPMC and CPPA-G to respond to queries of Standing Committee members as junior officials were unable to provide the explanations requested by the Committee members. On the issue of ToU meters, the minister stated that an exercise has been done in coordination with Aptma, which proves that if the mechanism of ToU meters is done away with it will have additional impact of Rs 35 billion on industry. Copyright Business Recorder, 2025
