ISLAMABAD: Pakistan has achieved the IMF’s target of maintaining the “status quo” of revolving loans, which could help it secure the next tranche of $1.2 billion, but the sector is struggling despite rising electricity prices. There is no possibility of improvement.
Officials of the Ministry of Energy said that the target of increasing the revolving credit to 385 billion was met by timely increase in electricity prices and reduction in line losses.
The IMF will review the implementation of these goals in the second review of the $3 billion bailout package, but did not give a final date for the next review in view of the formation of a new government.
Sources said that contrary to the requirement to keep revolving loans up to 385 billion by December, their level increased to 378, however, in the first half of this year, the total revolving debt of the power sector increased to 26 trillion 90 billion. Pakistan has promised to bring the revolving debt to the level of 23 trillion, 10 billion as of June 2023 by the end of the current fiscal year.
He said that the IMF’s strategic focus is on meeting the losses of the power sector through subsidies in the budget and increase in the price of electricity.
Sources said that the government has allocated 952 billion rupees in the budget for subsidy and payment of past debts. Due to the continuous increase in electricity prices, people have started using alternative sources including solar panels.
Officials of the Ministry of Energy said that the government has been continuously adjusting the tariff according to the fuel prices to prevent the increase in revolving debt. Power distribution companies have demanded an increase of seven rupees per unit for January, on which various circles, including Nepra, have expressed concern.
Meanwhile, the government has told the IMF that it is negotiating with IPPs to reduce costs and introduce a renewable energy system to reduce the burden on consumers, but there has been no concrete progress yet; Talks with Chinese power plants have not started, China has refused to consider agreements in this regard.
The government has also made no progress in handing over control of distribution companies to the private sector. In the first week of February, the Privatization Committee approved the privatization of the Gujranwala and Hyderabad distribution companies; IMF was also informed about the anti-electricity theft campaign.
The government has also enacted an ordinance in December making electricity theft a cognizable police offence, has also started an audit of distribution companies in Peshawar and Hyderabad, the report of which will be shared with the IF next month.
