Circular debt: World Bank, govt think deeply about steps

ISLAMABAD: A World Bank delegation led by Vice President for South Asia, Hartwig Schfer, held a meeting with the top brass of the Ministry of Energy on Wednesday and discussed energy sector reforms, including proposed measures to contain growth in circular debt.

Special Assistant to the Prime Minister on Power and Petroleum, Tabish Gauhar, Secretaries of Power and Petroleum Divisions, Pakistan Executive Director at World Bank, Naveed Kamran Baloch, Country Director Pakistan Najy Benhssine and other senior officials attended the meeting.

During the meeting matters related to World Bank funded ongoing projects in the energy sector were discussed.

SAPM on Power and Petroleum, Tabish Gauhar, who is dealing with the World Bank and Asian Development Bank has already written a letter to Minister for Energy Hammad Azhar on energy sector reforms.

The sources said both sides discussed issues in energy sector and measures taken to improve performance of gas sector and power sector.

Ministry of Energy is to submit circular debt plan to the World Bank and International Monetary. However, two issues, i.e. amount of subsidy for next year and proposed tariff increase, are yet to be finalised as Finance Division has not given any firm commitment. Improvement in Discos’ performance and giving them to the private sector through management contracts also came under discussion.

Power sector ‘racket’ unearthed by World Bank

The Minister for Energy informed the delegation that due to effective measures by the government the growth in circular debt was being curtailed to a considerable amount. He said that during the last fiscal year i.e. 2020-21 Rs 130 billion was added to the circular debt registering a decline of Rs 408 billion in the circular debt flow as compared to previous year. He informed the delegation that this summer around 20 percent increase in peak demand for electricity had been registered which was a good omen for the energy sector and the economy.

The Minister for Energy informed the delegation that Power Division had planned addition of considerable capacity in the existing transmission network by the end of current fiscal year for which funds had also been allocated. He underscored the importance of World Bank assistance in expansion and modernization of Pakistan’s electricity transmission system.

The Vice President, World Bank, while acknowledging efforts by the Ministry of Energy in slowing the growth of circular debt, renewed the commitment of WB to continue working with government in the energy sector. He said Pakistan had the potential of achieving growth rate of six to seven percent. He also stressed upon closer working between the experts group of Ministry of Energy and WB for achievement of targets.

Copyright Business Recorder, 2021