Energy minister briefs Senate: Rs100bn to be spent on power distribution system replacement

ISLAMABAD: Federal Minister for Energy Hammad Azhar informed the Senate on Tuesday that the federal government would spend around 100 billion rupees in this financial year to replace an ‘obsolete and redundant’ power distribution system across the country with a modern one while the government would soon sign a power purchase agreement with K-Electric to address the power crisis in Karachi.

“In the past, the focus was on power generation, not distribution. This government is focusing not only on power generation but also distribution,” he said at the Senate sitting.

He said the federal government spent Rs 77 billion in the last two to two-and-half years on improving power distribution system and nearly Rs 100 billion would be spent this year for this purpose.

“Record funds have been allocated in budget in this financial year to do away with obsolete power distribution system— It is the result of our effective measures that power generation has been increased from 20,000 megawatts to 24500 MW,” he said.

“Thousands of electricity transformers are being replaced—not only LT transformers but mega transformers installed in grid stations—old transformers trip due to overloading and their lives deplete—there are multifaceted challenges in power sector that we are tackling effectively,” he said responding to a question posed by Kamil Ali Agha from Pakistan Muslim League Quaid (PML-Q).

To a question posed by Khalida Ateeb from Muttahida Qaumi Movement-Pakistan (MQM-P), regarding power load-shedding in Karachi, Azhar said the government decided to formulate a new mechanism in April this year to tackle the Karachi power crisis.

“As part of this mechanism, we are going to sign a new power purchase agreement with K-Electric. This would certainly address Karachi’s power crisis,” the minister said.

“There has been a dispute going on between the government and K-Electric regarding Rs 200 billion payables and receivables. We are resolving these issues,” he said adding that Karachi is being provided 550MW electricity from the national grid that has resulted in a visible reduction in power outages in the cosmopolitan city.

To another question, Azhar said the government is improving power generation in Balochistan where 40,000 tube-wells are not paying electricity bills. The pending arrears due to non-payment of tube well electricity bills amount to Rs 70 billion, he said.

“This is a very serious challenge but we are handling it,” the energy minister said.

Minister of State for Parliamentary Affairs Ali Muhammad Khan said Roshan Digital Account has witnessed record inflows coming in the form of foreign remittances by overseas Pakistanis.

The government is working to facilitate overseas Pakistanis by simplifying procedures related to investment for overseas Pakistanis, he added.

“For this purpose, we are determined to eliminate red-tapism, so that overseas Pakistanis should not face any difficulties in making investments in Pakistan,” Khan stated.

Replying to a question, Khan said the government is working on a comprehensive strategy to further improve ease of doing business in the country.

To increase Foreign Direct Investment (FDI), a new comprehensive Investment Act is being proposed to replace the existing legislation for protection of investment of foreign investors, he added.

To a query posed by Mushtaq Ahmed from Jamat-e-Islami (JI) that FDI in Pakistan has always been less than one percent of Gross Domestic Product (GDP), Prime Minister’s Office (PMO), in a written reply, said, “(a) It is not correct that FDI has always been less than one percent of GDP. It varied during last 20 years from lowest 0.37 per cent to highest 3.37 per cent of GDP. (b) Though promotion, facilitation and protection of investment is the domain of BOI; however, attraction of investment needs a whole of government approach. All the economic ministries, provincial governments and the private sector need to play their respective roles in attraction of investment. Other areas which contribute towards inward investment are infrastructure, ease and cost of doing business and federal, provincial and local policy, legal and regulatory frameworks.”

The PMO said a number of steps have been/are being taken by the Board of Investment to increase the FDI to GDP ratio “as detailed here: Improving ease of doing business; improving business climate through Pakistan Regulatory Modernization Initiative; using Special Economic Zones (SEZs) to promote industrialization in the country; devising and implementing Investment Promotion Strategy to attract quality investment in the country; devising a Comprehensive Investment Law; online investment facilitation services like issuance of work visa, branch/liaison office, security clearance and issuance of airport entry passes. Integration of Investor’s Grievance Cell with Pakistan Citizen Portal.”

In addition, the PMO said, the following policies have also been introduced by this government to attract FDI; Electric Vehicle Policy, Mobile Device Manufact-uring Policy, National SME Policy, Strategic Trade Policy Framework and National Textile Policy. The House would meet again today (Wednesday).

Copyright Business Recorder, 2021