“IMF Warns Electricity Subsidies Could Disrupt Energy Market, Delay Bailout Talks”
The global lender raises objections to cheap electricity proposal
ISLAMABAD – The federal government has been unable to secure approval from the International Monetary Fund (IMF) for its proposal to allocate 2,000 megawatts of electricity at subsidised rates for Bitcoin mining.
According to sources within the Power Division, the plan was presented to the IMF during three separate rounds of negotiations, but failed to gain the institution’s support.
The IMF reportedly raised concerns based on previous experiences, arguing that offering cheap electricity under the guise of industrial incentives often results in ineffective outcomes and effectively functions as a “tax holiday.”
It raised concerns about the government’s strategy, questioning: if this electricity is provided at subsidised rates, what will be the plan to later sell the same electricity at market rates?
Sources revealed that the government has also shared this presentation with the World Bank and other tripartite donors in an attempt to persuade the IMF.
The government plans to offer electricity at up to Rs 24 per unit for Bitcoin mining, while currently, the country has a surplus of 7,000 megawatts of electricity, of which 2,000 megawatts are being considered for allocation to crypto mining.
The government maintains that the project could bring foreign exchange into the country and efforts are ongoing to convince the IMF to approve the proposal.
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