Before releasing the next tranche, the International Monetary Fund (IMF) has set seven new structural benchmarks for Pakistan under extended fund facility.
Pakistan would have to enact amendments to penal code 1860 and the code of criminal procedures 1898 besides determining multi-year tariffs for IESCO and LESCO by end of Jan 2016. The government would have to notify multi-year tariffs for FESCO, IESCO and LESCO by April. Besides, the govt would have to enact the Gas (Theft Control and Recovery) Ordinance 201 by February 2016 as well.
According to IMF report for the 2015, “Article IV Consultation, Ninth Review Under the Extended Arrangement, Request for Waivers of Nonobservance of Performance Criteria, and Request for Modification of a Performance Criterion”, Pakistan has stated that bidding process of FESCO would be completed by end-June 2016 leading to finalization of the transaction by end- September 2016. Meanwhile, IESCO and LESCO are expected to complete the bidding process by end- June 2016 and finalization of the transactions by end-September 2016. The government also stated that they hired financial advisors for GEPCO in April 2015; and for Hyderabad, Peshawar, Quetta, Sukkur, and Multan Electric Supply Companies (HESCO, PESCO, QESCO, SEPCO, and MEPCO) in May 2015. “We expect finalization of these transactions in 2016 and 2017,” it added.
Meanwhile, privatization of Jamshoro Power Generation Company Limited (JPCL) is expected to be completed by the end-September 2016 and finalization of the transaction by end-December 2016. Privatization of Lakhra Power Generation Company Limited (LPGCL) and Central Power Generation Company Limited (CPGCL) is expected to be completed by end-September 2016 and finalization of the transaction by end-December 2016.
“The government has amended the PIA Act through a Presidential Ordinance while initiating in parallel the process of seeking parliamentary approval. This will pave way for soliciting EOIs for strategic private sector participation by end-December,” stated Pakistan.
About PSM, Pakistan said, “The privatization process has been put on hold by the government’s decision in October 2015 to offer the provincial govt hosting the PSM to acquire the company. Should the provincial govt decline the government’s offer, the privatization process will resume with approval of the PSM transaction structure in Jany 2016 with the view to complete the bidding process by end-June 2016, and finalize the transaction by end-September 2016”.
The government assured the Fund that by the end-January 2016, it will prepare and submit to the National Assembly draft legislation against “benami” transactions, in which assets are held by or transferred to a person, but have been provided for, or paid by, another person.
According to the report, the payables in the power sector increased by Rs 13 billion in the first quarter of FY2015/16 and currently stand at Rs 326 billion at end-September 2015. The stock of past arrears, including the PHCL, in the syndicated term credit finance (STCF) facility remained at Rs 335 billion at end-September 2015.
“We will continue to reduce losses and improve collections through capital expenditures and revenue-based load management. Overall losses in at the last 12-months declined from 19.0 to 18.22 percent. Collections in the same period improved from 88.6 to 90.7 percent, primarily due to better load management across consumers in rural and urban areas, and industries”, Pakistan stated.