Pakistan Implements Levy on Captive Power Plants to Meet IMF Condition
In a crucial move to fulfill a significant condition laid out by the International Monetary Fund (IMF), the federal government of Pakistan has decided to impose a levy on captive power plants. This decision comes as part of efforts to align the gas prices in the captive industry with LNG rates, according to reliable sources.
Gradual Implementation of Levy to Prevent Gas Supply Disruption
Sources close to the matter have revealed that the government is gearing up to gradually introduce a levy on captive power plants. This gradual approach is being taken to prevent any significant reduction in gas supply to these plants. The IMF has shown flexibility regarding potential gas cuts to captive power plants, and the levy is expected to be put into effect before the disbursement of the next tranche of IMF funding.
Phased Implementation and Pricing Alignment
In the initial phase, a 5% levy on the gas supplied to captive power plants could be enforced as early as January. Subsequently, in the second phase, this levy may see an increase to 10%. Additionally, the sources have disclosed that the gas prices for the captive industry will be adjusted to align with LNG prices. The primary objective of imposing this levy is to eliminate the existing disparity between captive power plants and other industries, addressing concerns raised by the IMF regarding varying electricity rates.
Stock Market Reaction and Economic Relief from UAE
The Pakistan Stock Exchange (PSX) experienced a notable decline in trading today, with the KSE-100 index dropping by 1,840.96 points or 1.58% to reach a current index of 114,414.16 during intra-day trading. Despite this negative movement, trading activity remained robust, with a substantial number of shares exchanged and a turnover value of approximately PKR 14.77 billion.
On a positive note, Prime Minister Shehbaz Sharif announced that the United Arab Emirates (UAE) has agreed to extend a $2 billion loan deposit, offering significant fiscal relief to Pakistan. During a cabinet meeting, PM Shehbaz shared details of his recent meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan, revealing that the UAE has proposed extending the loan repayment due in January as a supportive measure for Pakistan’s economic stability.
In conclusion, Pakistan’s decision to implement a levy on captive power plants marks a crucial step towards meeting IMF conditions, while the UAE’s financial support provides a much-needed boost to the country’s economic landscape.
