Pakistan’s Finance, Energy Ministries Arguing Over IMF Condition Regarding Cutting Gas Supply To Industrial Plants

The Petroleum Division of the energy ministry claimed that the finance ministry accepted the conditions of the IMF package despite the former’s reservations at the time of the negotiations

Responding to the allegations, the finance ministry said that the Petroleum Division agreed during negotiations with the IMF and now it was changing its stance.

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The finance and energy ministries are Pakistan are unable to come to an agreement regarding a crucial IMF condition of lowering gas supplies to industrial power plants by January. The Express Tribune reported that the Petroleum Division of the energy ministry claimed that the finance ministry accepted the conditions of the IMF package despite the former’s reservations at the time of the negotiations.

Further, the department alleged that abrupt disconnection of gas supply could result in a Rs 427 billion loss for the government and the industries, reported PTI. Responding to the allegations, the finance ministry said that the Petroleum Division agreed during negotiations with the International Monetary Fund (IMF) and now it was changing its stance.

The development comes as the energy ministry’s assessment revealed that the shift of industries from gas to electricity would need nearly two years. The issue highlighted the problems being faced during the negotiations of the $7 billion agreement with the IMF.

The report cited industry experts and said that this tussle indicates that the Pakistani officials didn’t fully evaluate the conditions before accepting the term of disconnecting gas connnections by January 31, 2025. 

The domestic newspaper reported that both departments failed to come to an agreement despite the conflict escalating to the level of Prime Minister Shehbaz Sharif, who has conducted atleast two meetings on the matter.

Citing sources in the know, the report said that four meetings were conducted with the IMF in last week. Earlier in September, Pakistan agreed to nearly 40 conditions in return for the $7 billion package from the IMF. One of these conditions stated that the country will stop the supply of gas for in-house power generation by industries. However, in mere weeks, the ministries began arguing with each other.

Notably, the IMF deal package calls for reforms in the gas sector which will focus on price normalisation across sectors and captive power elimination.