ISLAMABAD: Amid nationwide protests against high electricity bills, the federal cabinet meeting on Tuesday failed to announce immediate relief for the inflation-affected public and before approving any proposal the International Monetary Fund (IMF) F) decided to take approval.
A Cabinet meeting chaired by Caretaker Prime Minister Anwarul Haq Kakar considered proposals to provide relief to consumers who consume up to 400 units per month during the months of August and September, JEE News reported on Wednesday.
After attending the cabinet meeting, Caretaker Information Minister Murtaza Solangi said that the government will announce the decision after taking the IMF on board in the next few hours.
“Caretaker Finance Minister Dr Shamshad Akhtar is in touch with IMF officials in this regard,” a statement issued by his office on Tuesday night said, citing a conversation with a private television channel.
The Minister said that some proposals came up for discussion before the Cabinet and some of them were approved. “Some decisions have to be taken on board by the IMF,” Solangi said.
He pointed out that the Caretaker Cabinet has decided to take steps to provide relief to electricity consumers without affecting the core surplus and revolving credit.
Official sources said that the meeting of the federal cabinet lasted for about two hours and some of the proposals sent to the forum by the power division were approved.
It has been learned that according to the decision of the Federal Cabinet, there will be no reduction in the electricity rates, however, the consumers who use up to 400 units per month in the months of August and September will be given relief in terms of adjustment in the next six months. .
He said that the cabinet expressed serious concern over the nationwide protests against electricity bills. It was also seen that the government’s hands are tied due to the IMF agreement.
The Power Division also briefed the Federal Cabinet on the provision of free electricity to VVIPs, VIPs and employees and officers of power distribution companies.
It was decided to look into the matter and it was observed that no hasty decision should be taken and the public should be made aware of the facts.
It should be noted that the caretaker prime minister himself had given 48 hours time to bring suggestions to the concerned authorities to provide relief to the electricity consumers.
Demonstrations took place across the country for the fifth day in a row on Tuesday as protesters publicly burned bills and refused to pay them.
This decision has been taken in the context of the borrower’s tight financial position due to core deficit and revolving credit facility within the stipulated limits.
There is no possibility of reducing surprise taxes as this would result in a deviation from the primary surplus agreed with the IMF.
The government will have to get the approval of the fund staff to collect August and September dues from consumers using up to 400 units in a phased manner.
Secondly, the government has to pass Quarterly Tariff Adjustments (QTAs) in the range of Rs 4 to 6 per unit, so it was also proposed to be suspended for a period of four to six months. It is not possible to present a set of proposals to the IMF without Cabinet approval. IMF staff will now be approached to approve monthly relief against expensive bills.
“The massive depreciation of the rupee against the dollar has increased the repayment capacity several times to Rs 2.2 trillion. Secondly, the increase in the policy rate has also increased the borrowing cost of local power producers. “Jacked up. We are left with no option but to slap the increased electricity bill on those consuming up to 400 units only. There will be no relief for those consuming more than 400 units,” the Caretaker Prime Minister said. After the cabinet meeting chaired by Anwar-ul-Haq Kakar, top government sources confirmed the background talks to JEE News.
Another top power sector official said that in the context of the lowest domestic savings rate in all of South Asia, Pakistan had to rely on foreign savings, so Independent Power Producers (IPPs) capitalized on foreign savings. Brought to work. power sector.
Initially, the exchange rate was fixed in unsustainable ways and eventually the depreciation of the dollar reflected the exchange rate risk. Now the rate of rupee and dollar in the interbank market has crossed 300 rupees, while the rate in the open market is much higher.
“Even if all other electricity factors were constant, exchange rate depreciation would have increased electricity prices by two-thirds,” the official said, adding that the government had to rely on foreign savings as the country’s tax-to-GDP ratio increased. could not increase the ratio, hence the financial space was not available to build our power plants from domestic resources.
Now foreign investors have to repatriate profits and gains, thus putting pressure on the exchange rate.
He said other power sector losses were also causing problems for the cash-bleeding power sector, which caused an estimated annual loss of Rs 900 billion.
Now under the IMF programme, there are two options for providing fiscal incentives to the power sector – increasing the primary deficit or allowing an increase in revolving credit, as there is no other option available to the government at the moment.
The proposals approved by the cabinet will now be presented to the IMF on Tuesday night or within this week and after going ahead, the government will announce its relief package for power consumers.
