IMF team ‘quizzes’ PD’s top brass

ISLAMABAD: The International Monetary Fund (IMF) Mission has reportedly quizzed top brass of the Power Division for consecutive two days on failing to meet commitments including increase in tariff, poor performance of the sector and restricting subsidies only to vulnerable domestic consumers, well-informed sources told Business Recorder.

The Power Division, comprising Secretary Rashid Mahmood Langrial, Additional Secretaries, Joint Secretary (Power Finance) and other concerned officials held meetings with IMF team in a local hotel, where the visiting Fund team raised questions on the performance of power sector and violation of commitments made in the previous review, saying why promises are made when there is no capacity to meet them, sources added.

The main concern of the Fund was the increase in circular debt, which is now hovering around Rs 2.55 trillion, as the authorities have failed to contain it due to poor performance with regard to reduction in losses (T&D), improvement in recovery and attracting private sector to run Discos, the sources continued.

Dar meets IMF review mission, apprises it of planned power sector reforms

The government is expecting over Rs 900 billion addition to the existing stock of circular debt, raising the stock to over Rs 3.3 trillion because of its failure to recover outstanding receivables of over Rs 1 trillion from private and public sector. Non-implementation on third phase of subsidy reduction also came under discussion. Power Division has already implemented it in two phases.

The sources said, the IMF is insisting on increase in tariff by at least Rs 5 per unit, reduction in subsidy available to domestic consumers except lifeline consumers and withdrawal of subsidy to the five export-oriented sectors announced on 6 October by Finance Minister Ishaq Dar.

According to official documents Pakistani authorities had assured IMF that recovery will be around 94 percent, but in fact it remained less than 90 percent. Transmission and Distribution losses were higher than 17 percent against the commitment of 15.83 percent.

Electricity demand remained depressed at 44 billion units during first quarter of current fiscal year (FY22 at 44.4 percent) whereas the IMF had been given the understanding of 45 billion units.

The authorities have also been quizzed for extending subsidy of Rs 281 billion to K-Electric sans budget allocation, which is increasing circular debt stock.

The IMF has been given assurance that exchange rate would remain around Rs 232/$ which is still on higher side.

Copyright Business Recorder, 2023