ISLAMABAD: Without allowing hike in electricity and gas rates, the government on Saturday directed the authorities concerned to come up with viable plans to reduce the revolving credit monster which has now reached Rs 4 trillion.
However, without changing prices, the International Monetary Fund (IMF) has recently rejected an initial plan by Pakistani authorities to cut the revolving credit joint with them because the fund is used for electricity and gas production. Seeks recovery of cost of sectors.
Sources told JEE News on Saturday that a high-level meeting was held under the chairmanship of Finance Minister Ishaq Dar to discuss the plan to reduce revolving credit in the energy sector, which was submitted to Prime Minister Shahbaz Sharif for his approval. will be done
Thereafter, this revised updated plan will be shared with the IMF. But the meeting with the Prime Minister was postponed and is now expected to take place possibly on Sunday or Monday (tomorrow).
Top IMF officials assured Pakistani officials that they would continue to hold virtual meetings during the Christmas holidays and tasked Pakistani officials with developing a workable plan to eliminate revolving credit. The IMF had expressed dismay that the power sector’s revolving credit did not show the desired improvement at the completion of the seventh and eighth reviews under the Extended Fund Facility (EFF) programme. The displeasure of the IMF increased further when the revolving debt of the gas sector reached Rs 1600 billion.
Under the plan, the government was considering coming up with alternative schemes such as parking revolving loan proceeds in special purpose vehicles, directing gas utilities to declare their profits and use them for financing, After the investment of Term Finance Certificates (TFCs) in PIBs and approval from second Prime Minister Shahbaz Sharif, the government will share the revised plan with the IMF with the hope that the fund’s staff will approve it. But another problem remains as the government of Pakistan had deferred payment of bills during the peak summer season and now the deferred amount will require around Rs 100 billion. The IMF wants the government to receive the money instead of calling it a subsidy.
Pakistan and the IMF will also have to agree on the subsidy amount for reducing electricity and gas prices for export-oriented sectors. Kisan package and its financial requirements will also be determined. IMF asked to share plan to justify subsidy amount on tubewell and find financial space for it. It remains to be seen how the government will convince the IMF of its cost recovery plan without raising prices in the energy sector.
Official sources said that the government has to decide on the tax and at the same time two options are being considered for levy. The government has proposed levy of 1 percent or 2 percent on non-essential imported goods.
According to an official statement issued by the Ministry of Finance, Minister for Finance and Revenue Senator Muhammad Ishaq Dar chaired a meeting on energy sector reforms at the Finance Division on Saturday. Minister of State for Finance and Revenue Dr. Aisha Ghos Pasha, Minister of State for Petroleum Mossadegh Masood Malik, SAPM for Finance Tariq Bajwa, Secretary Finance, Secretary Power and senior officers attended the meeting. The meeting discussed the introduction of various reforms in the energy sector and issues of stock and revolving credit flow in the sector.
Highlighting the importance of energy sector reforms, Dar said that energy sector reforms are very important for the economic development of the country. He further said that the government prioritized solving the problems of the power sector including revolving credit for the financial stability of the sector and economic development of the country. He further directed the authorities concerned to find workable solutions to solve all the problems in the energy sector.
