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The International Monetary Fund (IMF) has rejected the Energy Ministry’s proposed three-year marginal electricity tariff package for industrial users, including artificial intelligence (AI) and data center operations, according to reports.
The proposal was aimed at providing cheaper power to industries, AI projects, and data mining centers by utilizing the 8,000 MW surplus electricity currently available in the national grid. Under the plan, consumers would have been charged only for the actual production cost and capacity charges on additional electricity usage, with taxes and other levies waived to encourage industrial growth and digital innovation.
Sources familiar with the matter said that the proposed power tariff relief for industries and AI data centers also included a reduction in per-unit taxes to make large-scale electricity consumption more viable for businesses operating in high-energy sectors.
However, the IMF turned down the proposal due to the ministry’s inability to provide guarantees for 100 percent revenue recovery. The Fund insisted on full cost recovery, including both the production and capacity components, as a condition for moving forward with any tariff-related concessions.
Power Secretary Cites IMF Oversight Amid Surplus Electricity Generation
This aligns with recent remarks made by Secretary Power Dr. Fakhray Alam Irfan, who stated that all major power sector reforms and initiatives now require IMF consent. He highlighted that while Pakistan currently has a surplus in electricity generation, particularly during the winter months, the IMF remains cautious of any subsidised power tariff relief measures that could lead to market distortions.
The Energy Ministry is now working to revise the package in line with the IMF’s requirements. A modified version is expected to be presented during the upcoming economic review talks between Pakistan and the IMF.
The rejection of the power tariff relief for industries and AI data centers comes at a time when the government is seeking to boost industrial activity and attract foreign investment in emerging tech sectors. Yet, without relief on energy costs, stakeholders fear that competitiveness could decline, particularly for AI infrastructure and data-driven enterprises.
