Having planned to add about 10600 megawatts (MW) of electricity to the national grid by end 2017, the PML-N dominated federal government is all set to convene a parliamentary parties meeting to take the country''s political stakeholders in confidence on Pak-China Economic Corridor (PCEC). Federal Finance Minister Muhammad Ishaq Dar says various mega power projects are presently under implementation to not only bridge the existing 4500MW energy deficit but also cater to the additional demand for industrial sector.
This the federal minister said while visiting Recorder House here Monday, April 27, which marks the 50th anniversary of Daily Business Recorder, the country''s first and largest financial newspaper.
Of the total, Dar said, 3600MW would be produced through a single cycle LNG-fired power generation plants. While at least 7000MW would be generated through Neelum-Jehlum, Tarbela 4 and other mega projects that would be ready for commissioning within next 24-26 months.
Some coal-based power projects also were underway which, the minister said, won''t be able to ready for generation by the government''s timeline.
"If we properly pursue them (in terms of implementation) these would be ready at maximum by 2017," said Dar who has formed a special team of professionals which meets twice a month to monitor the completion of these ventures. The next 10 years would see the energy-scarce country generating 24000MW.
Mainly financed by the Asian Development Bank (ADB), the government is also working on the transmission line required to support these projects in terms of supply.
Further, the government is in talks with its Chinese counterpart for the import of 3000-4000MW of electricity from the latter''s province adjacent to Pakistan''s border.
But such a plan would require the country a power transmission line from China to Pakistan that, Dar said, would be laid on a very difficult terrain. The job, the finance minister thinks, should be outsourced to the state-owned Chinese companies which had recently laid a Turkmenistan-Beijing pipeline within 18 months. "The annual revenue of those companies stand at $265 billion," he said.
The issue Dar discussed with the Chinese president during the latter''s recent visit. Despite all these efforts, the country''s energy crises were far from resolution before end 2017, the federal minister stated categorically. Finance Minister also revealed that we will "cap solar and wind power".
To a question on secrecy being maintained by the ministry of petroleum on the LNG import project, Dar said transparency would be ensured through sharing with public all the facts relating to the deal.
In last Thursday''s parliamentary parties meeting, he said, some political leaders had voiced concern over the government''s perceived dubious stance over the route of the Chinese corridor and LNG imports.
The finance minister then told the detractors that barring about $12 billion public sector investment, most of the investment for $46 billion PCEC projects would come from the "more efficient" private sector. "(In China) we have EximBank, CDB, ICBC a whole consortium in fact," he said.
The minister hinted that the Chinese officials in a "very polite manner" had expressed concern over media reports claiming that recent Chinese president''s visit was Punjab-specific. "Chinese are very sensitive to media talks. We must not lose this opportunity," he warned.
Then, he said, long-term projects like PCEC would outlive the PML-N''s ruling tenure and were therefore of a national character.
Such reports, the minister said, were "presumptive misperceptions" based on an information gap that would be bridged in a parliamentary party meeting the federal government would be holding as soon as the prime minister comes home from abroad.
In the meeting Planning and Development Minister Ahsan Iqbal would be making, what Dar said, a candid and detailed briefing to the political stakeholders.
To a question, the minister said the issue of rupee-dollar parity might be hurting the country more because the dollar had gone stronger against the rupee. "Otherwise there is no problem". About the government''s devaluation plan, Dar said, the move never would favour the resource-constrained country which would lose Rs 65 billion for Re 1 devaluation. "Whenever devaluation is made the importers stand up to get half of the discount," he said.
Besides, the minister said, devaluation of currency also affect adversely on the cost of production that further makes exports uncompetitive.
Dar conceded that the country''s non-traditional exports worth Rs 250 billion were constantly coming down in volume. Besides energy crises, he said, this might be the result of overall decline in global commodity prices that had shocked the economies world over with Pakistan''s overseas importers having adjustments in their respective economies. "You know the Europe has to do QE (Quantitative Easing)," he said.
The rupee, being dollar intervention-based, automatically appreciates with the rise of the dollar which, the minister thinks, is the one of the well-performing currency on the strength of the US economy and strengthening economy of the world.
Given the fact that more than 85 percent of the country''s foreign debts stands dollar-denominated, it is not possible for the rupee to operate independently. "That''s why the country could never have had diversification of its (foreign exchange) reserves holdings," the finance minister said adding "Now I am asking SBP to manage the reserves properly."
Proposing the involvement of strategic partners for the revival of loss-making PIA and PSM, Dar revealed that the EximBank in Washington was considering a long-term financing of up to $1 billion for Pakistan.
"We have considered restarting long-term loan with you," the minister quoted the bank''s chairman as saying during his recent visit to the US capital.
This funding, he hinted, might be used for putting the PIA and PSM back on track. About his government''s plans for the two PSEs, he said: "Let there be a new PIA and old PIA".
The new company would have a fresh balance sheet inclusive of the value of the planes and air routes. This can be taken to the strategic partner, possibly a well-reputed airline, for the sale of 26 percent stakes of the new PIA.
Suggesting the same fate to Steel Mills, he said a professional strategic partner could value-add to the mill which''s production capacity was currently staggering at 50 percent with its management trying hard to increase the same by 77 percent which is the break-even level.
Drawn towards the contradictory provincial laws on the collection of sales tax on services that are hindering instead of facilitating the tax filers, Dar said FBR had ''virtually'' been playing the role of a collection agent for the provinces.
The concept of sales tax on services is based on ultimate user. "No problem arises as long as the provinces do not trespass each other''s scope of collection".
To facilitate taxpayers, the minister said, the provinces should have uniform tax rates and that the prevailing inter-provincial "distrust" must be overcome to resolve disputes. In their transition to revenue collecting authorities, the provinces, instead of taking a solo flight, should have engaged FBR, a far superior entity in tax collection, viewed the minister.
Some politicians, he said, had a tendency to take political mileage out of the impression that Karachi generates 70 percent of the country''s revenues. "It is consumption and not collection that matters," the finance minister argued.
About tax refunding, the finance minister said the government had cleared the refunds of about 26000 small filers, having claims of up to Rs 1 million, out of total 36000.
In last budget, a queue was made to fast track the exporters'' refunds. But it is all computerised. The first in line is paid refunds," he said.
To curtail the country''s ever-increasing imports, the minister said, the National Tariff Commission (NTC) had been revamped through revising the relevant laws and assigning a new working team. "For complying with WTO rules, the NTC would have to be proactive," he observed.
Unlike past, the Economic Co-ordination Committee of the federal cabinet was meeting twice or thrice in a month to take up and resolve all the economic issues the nation was facing.
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