Islamabad: The finance and energy ministries of Pakistan are locked in a dispute over a critical condition imposed by the International Monetary Fund (IMF): reducing gas supplies to industrial power plants by January. According to The Express Tribune, the Petroleum Division of the energy ministry has accused the finance ministry of agreeing to this condition despite the Petroleum Division’s reservations during negotiations.
The Petroleum Division warned that cutting gas supplies abruptly could lead to a staggering loss of Rs 427 billion for the government and the affected industries, as reported by PTI. In response, the finance ministry countered that the Petroleum Division had agreed to the condition during the IMF negotiations and was now backtracking.
Impact of the Gas-to-Electricity Transition
The energy ministry’s analysis revealed that transitioning industries from gas to electricity would require almost two years to implement effectively. This delay underscores the challenges Pakistan faces in adhering to the $7 billion IMF agreement.
Industry experts cited in the report noted that this disagreement reflects inadequate evaluation of the conditions before signing the deal, particularly regarding the January 31, 2025, deadline for disconnecting gas supplies.
Escalation to Prime Minister’s Office
The ongoing conflict has reached the office of Prime Minister Shehbaz Sharif, who has chaired at least two meetings to address the issue. Despite these efforts, no resolution has been reached between the two ministries. Sources revealed that four meetings were held with the IMF last week, yet the dispute persists.
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In September, Pakistan agreed to nearly 40 conditions to secure the $7 billion IMF package. Among these was the commitment to halt gas supply to industries using it for in-house power generation. However, the discord between ministries emerged within weeks of the agreement.
Broader Reforms in the Gas Sector
The IMF package also includes broader reforms in Pakistan’s gas sector, focusing on price normalization across industries and the elimination of captive power systems. These measures are aimed at addressing systemic inefficiencies and ensuring sustainable energy management.
