IMF dissatisfied with power sector performance

ISLAMABAD – The International Monetary Fund (IMF) on Thursday expressed dissatisfaction over the performance of Pakistan’s power sector and recommended to improve the revenue collection by reducing the line losses and collection of electricity bills.

The IMF noted that incumbent government should bring reforms in the power sector to reduce the losses. The Fund recommended the government to improve the collection of electricity bills and reduce the subsidy either by increasing the power tariff or improving the system.

Talks between IMF and Pakistan on the bailout package continued in Islamabad for a second day on Thursday.

Sources said that power division briefed the IMF on power sector performance including losses and recovery.

IMF noted that previous govt had not brought reforms in the power sector despite giving assurance several times, they further said. The Fund emphasised on the PTI-led govt to bring reforms in the power sector to reduce the circular debt of the country. The circular debt had already swelled to about Rs1.2 trillion. The number included the fresh flow of Rs615 billion and old stock of Rs582b parked in the special purpose vehicle — Power Holding Company Ltd.

The power division has informed the Fund about government’s plan to reduce the circular debt of the country. They added that government had recently hiked power tariff up to 15 percent but guarded the poor consumers against its direct impact. The government had approved 10 percent or Rs1.18 per unit increase in tariff for the consumers using 301 to 700 units per month, and 15 percent increase for those using more than 700 units per month. However, the government had not increased the power tariff for the consumers using up to 300 units every month in order to protect the lower segment of the society from the price hike.

The power division briefed the visiting delegation that the government had not enhanced the power tariff for the five exports-oriented sectors to reduce the cost of doing business. The government wanted to enhance the exports to reduce the soaring current account deficit of the country. It further said that government was taking measures to control the power theft and improving recoveries.

Technical level talks may also continue today (Friday), which would be followed by the policy-level talks from Monday. Finance Minister Asad Umar will head the Pakistani delegation in policy-level talks. The talks between IMF and Pakistan will continue till November 20 with finance secretary, chairman Federal Board of Revenue and governor State Bank of Pakistan will be in attendance during the meetings. During the current technical talks, Pakistan is sharing economic data of different ministries and division.

Meanwhile, in a separate development, the Senate standing committee on power has discussed the power theft in the country. It has also discussed the government’s strategy to control the power theft. The committee was informed that national kitty had so far suffered Rs900 billion losses due to power theft and line losses. The committee was informed that govt had initiated crackdown against power theft with the help of provinces. The officials of the power division informed the committee that govt had decided not to give any electricity connections to the defaulters.

The committee was informed that agreement of federal govt and K-Electric had expired in 2015 for providing 650 megawatt electricity to the company. However, both the sides were negotiating for renewal of the agreement. The federal govt is providing 650mw electricity to K-Electric on the direction of Supreme Court of Pakistan until finalisation of the new agreement between the two sides.


APP adds: Federal Minister for Finance Asad Umar said enhancing the country’s exports was the only way to overcome the external debt or we have to seek more loans from IMF to run the affairs of the country.

Talking to a private news channel, he said that when PTI government came into power, the country’s economy was facing the deficit of Rs 800 billion.

He said trade can be improved with all the neighbouring countries including Afghanistan, Iran, China and Saudi Arabia. The minister said Saudi Arabia was taking keen interest regarding investments in different projects of Gwadar Port. Similarly, he said we have deep rooted cultural and brotherly relations with Iran and currently, the trade volume with Iran is about 1.5 billion dollars that should be enhanced.

He said Pakistan is the country where there was a lot of investments opportunities in different fields and we will welcome all the countries who want to invest here. Replying to a question about the China visit, he said it was very successful visit of Prime Minister Imran Khan and Chinese President and Prime Minister assured their full support and cooperation in every field, beside showing their complete confidence in the leadership of Pakistan.

Replying to another question about IMF, Asad Umar said that discussion was underway with the IMF team that is now in Pakistan.

All the four Provincial Secretaries, Governor State Bank are negotiating with the IMF team and all the technical issues are being taken under discussion in the meeting, he stated.

The Finance Minister said that it is our moral responsibility to brief the Parliament, once the agreement done with IMF we will disclose all the terms and conditions in the National Assembly.

Replying to another question, the Minister said that every year around 20 lakh youth came in the market and it was the government’s responsibility to provide them jobs.

These opportunities would be created by the foreign or private investment in different field including agriculture, construction and tourism, he added.


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