Captive power plants: No significant progress made in talks with IMF: official

ISLAMABAD: Dr Fakhre Alam Irfan, Secretary of the Power Division, has revealed that no significant progress has been made in talks with the International Monetary Fund (IMF) regarding an extension for the closure of Captive Power Plants (CPPs), pledged to be disconnected by January 31, 2025.

In response to questions about the proposed disconnection of CPPs from the natural gas system, Dr. Irfan explained that the Federal Cabinet had made this decision in 2021. However, for various reasons, the decision has yet to be implemented, although for the ongoing programme it is a structural benchmark agreed with

the IMF.

He further explained that there are approximately 1,100 to 1,200 CPPs in the country, with about 500 located in Karachi and another 500 to 550 spread across other regions. The Petroleum Division is responsible for the disconnection, which is required to be completed by January 31, 2025, to facilitate their shift to the national grid.

“The benefits will materialize once these CPPs are connected to the grid,” he said, adding that 85% of CPPs already have grid connectivity.

The Secretary of the Power Division also noted that the IMF believes if 4,000 to 5,000 industrial units can operate on the grid, then there is no reason why 1,000 CPPs cannot, calling it an issue of “elite capture.”

“As their gas supply is cut off, the government will be able to demonstrate the financial benefits of this action,” the Secretary added.

Dr. Irfan mentioned that some industries have enough load to continue operations after gas disconnection, while others will need to enhance their capacity. The government is providing support to facilitate this transition.

He acknowledged that discussions with the IMF on the CPP issue are ongoing, and several sessions have been held, though no tangible progress has been made yet.

The Minister emphasized that the electricity cost for CPPs using gas is significantly lower than the rates for regular electricity consumers.

Mustafa Kamal, MNA, raised concerns about gas supply discrimination among captive consumers, pointing out that some receive more gas than others. The Minister agreed, stating that there is a disparity between consumers who use both electricity and gas, and both the government and the IMF aim to address this imbalance.

“We are negotiating with the IMF on one hand and engaging with the CPPs on the other,” the Minister said, adding that a resolution is expected by the end of the current month. However, he reiterated that the government is committed to eliminating disparities in the system.

Copyright Business Recorder, 2025