The International Monetary Fund (IMF) has dismissed Pakistan’s proposal to provide subsidised electricity rates for crypto mining operations, citing concerns about market distortions and further strain on the country’s already burdened power sector.
Ongoing Talks and IMF’s Concerns
The IMF’s dismissal of the proposal marks another setback for the government’s bid to attract foreign investment through digital asset infrastructure projects.
During a recent session of the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Power Secretary Dr. Fakhray Alam Irfan confirmed that discussions with the IMF over the proposed tariff concessions are ongoing. He acknowledged that the IMF rejected the idea due to apprehensions about its potential to destabilise the power market and create fiscal imbalances.
He claimed,
"The agency is concerned about market distortions over Pakistan’s subsidised energy rates proposal."
Dr. Irfan also added that the fund viewed the measure as a sector-specific incentive that could trigger broader economic imbalances.
Details of the Proposal and IMF’s Response
In September 2024, Pakistan’s Power Division tabled a plan to allocate 2,000 megawatts of electricity to data centres and crypto mining ventures, offering a six-month tariff package at a marginal rate of Rs 23 per kWh. However, the IMF only approved a scaled-back, three-month version at the time, flagging risks to market stability.
By November, the government sought to introduce a targeted subsidy framework to encourage the use of surplus electricity by crypto mining and metal industries. This too was rejected, with the IMF warning it mirrored tax holidays that historically disrupt economic equilibrium.
Last month, the IMF raised additional concerns, questioning the legality of large-scale Bitcoin mining in Pakistan and the potential strain such projects would place on the nation’s fragile power grid. The fund also criticised Islamabad for failing to consult with it prior to announcing its mining initiative.
Broader Energy Sector Challenges
The committee meeting also addressed unrelated but pressing issues in Pakistan’s energy sector. Members discussed the ongoing problem of electricity theft and debated technological measures to curb losses. Additionally, the panel reviewed a recent agreement with commercial banks aimed at reducing the nation’s circular debt stock of Rs 1.275 trillion.
Senator Shibli Faraz voiced sharp criticism of the deal, alleging that financial institutions had been “forced” into the arrangement. He warned that ordinary consumers would ultimately bear the cost through future energy levies.
Next Steps for the Government
Despite the IMF’s firm opposition, Dr. Irfan confirmed that the government is not shelving the plan altogether. Negotiations with international institutions continue as Islamabad seeks to refine its energy pricing framework for emerging industries.
The Senate committee has directed the Power Division to provide comprehensive clarifications on multiple pending issues at its next meeting. The rejection from the IMF underscores the broader difficulties Pakistan faces in reconciling its aspirations in the cryptocurrency sector with the operational and financial constraints of its national power system.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
