Complying with IMF agreement on fiscal deficit: Dar accused of not releasing available fund to power sector

Planning Commission (PC) has accused Finance Ministry of not releasing $19.6 billion dollar available funding to the power sector fearing that it will widen fiscal deficit over and above the agreement with International Monetary Fund (IMF).
Addressing a seminar titled "emerging energy scenario: issues & priorities" organised by Institute of Policy Study (IPS), a senior official of Planning Commission revealed that energy sector portfolio in the pipeline was $ 19.6 billion however the Finance Ministry's priority was to keep the fiscal deficit within the agreement with IMF even at the cost of increasing generation capacity.
"We are not taking a loan because that would become part of PSDP which is expenditure and which will add to the fiscal deficit," he added.
Experts urged the government to invest in effective policy planning for the energy sector and learn from the lessons and shortcomings of the past, which have resulted in the present energy crisis, especially the chronic circular debt issue.
Chairing the seminar, Mirza Hamid Hasan, former Secretary Water & Power and Chairman of IPS' research programme on energy issues, maintained that the Planning Commission of Pakistan has been reduced to the role of a project approval agency and it was at a standstill for the last several years in achieving its main objective, ie, to do forward planning for the country.
Syed Akhtar Ali, Member (Energy) of the Planning Commission and Muhammad Arif, President, Energy Lawyers' Association of Pakistan, were speakers at the seminar which was attended by a number of energy experts, officials of the concerned government ministries and departments, policy researchers, industry representatives and media personnel. Issues, challenges, and priorities of Pakistan's energy sector were discussed at length.
Syed Akhtar Ali defended the government's position by stating that the policies vis-à-vis energy sector were investors-friendly and especially the tariff being offered in renewable energy was comparatively much higher than in other parts of the world. He gave the example of the tariff for wind energy, which is between 4 to 8 cents internationally but in Pakistan it has been fixed at 14 cents to attract investment - almost double of India's.
He also revealed that the much-hyped coal-fired electricity generation projects of Gadani, Balochistan have not been dumped altogether. Rather, on the request of the Chinese firms they will now be installed at Port Qasim, Karachi.
He earlier presented a brief of various measures taken by the government to cope with the energy crisis including strengthening of transmission infrastructure, expansion of energy production and supply mechanisms, promotion of renewable energy resources and attracting foreign investments for the purpose.
He said that the government was not oblivious to the idea of developing its indigenous resources like coal and hydel to provide a rather sustainable solution to the country's energy problems. He however admitted that there were constraints of numerous sorts, including fiscal, technical, etc, which the government had to consider while devising its policies. He supported his argument with the suggestion of using LNG over coal as a quicker, as well as logistically manageable solution.
Muhammad Arif urged the government to allocate adequate budget for oil and gas explorations on war footing as about two-third of the country's potential area was still unexplored. He also advocated against the idea of privatisation of institutions like OGDCL, maintaining that the country's strategic assets must never be privatised as historically the idea has yielded little success in cases like PTCL and KESC (now KE).
The speaker maintained that the frequently used term 'energy shortfall' should rather be corrected to 'financial shortfall', as it was originally the lack of financial resources that was hurting the cause.
The interactive discussion following the presentations also underscored the need to check the exploitative interest rates of the banking sector in financing the energy projects, which lead to exorbitant tariff rates ultimately. The experts also raised concern that by allowing such high interest rates against project financing the regulator was protecting the interest of the banking sector instead of the consumers.