ISLAMABAD: The members of the Senate Standing Committee on Finance demanded of the government to withdraw seven different kinds of taxes it is collecting on electricity bills and prevent power theft besides ending facility to the privileged groups.

However, caretaker Finance Minister Dr Shamshad Akhtar told the Senate Standing Committee on Finance meeting presided over by Senator Saleem Mandviwalla that the caretaker government does not have the fiscal space for subsidies but added that the proposal was under consideration to withdraw electricity to privileged ones.

The Senate committee expressed concerns over the growing exchange rate fluctuations, unprecedented electricity cost, and a 22per cent interest rate that are making it challenging for current businesses to survive and thrive.

Final decision expected today: PM holds consultations on electricity bills

She said that this perception is not true that the caretakers have unlimited options, instead they have limited options and will work in a defined period. She said that the previous government had made an agreement with the IMF and the caretaker government cannot do anything in this regard.

While talking to the media after the committee meeting, Akhtar said that the caretaker government will work for the betterment of the people, however, decades of policies cannot be changed overnight. She said, “We have assured the IMF staff that the government is committed to the agreement made by the previous government. We will fulfil all the commitments made by the previous government with the IMF.”

“The country’s economy is my priority,” the minister added.

The minister said that economic stability is important and it can be anchored through fiscal discipline.

Akhtar said that after a week, she would brief the committee as to what is doable and what is not in the given situation along with a briefing on the state of the economy. The minister said as the country is in the IMF programme, therefore, there is a need to tread very carefully and should not take any step which is irresponsible or bad because bilateral loans are linked to the IMF programme.

The minister added that the country is totally an import-dependent country in terms of energy (oil) and these are required to pass on because there is no fiscal space to give subsidies.

She said that domestic revenue has to be mobilised and the country’s primary focus has been taxes only but now there is a need to harness the capital market for which the government is proactively engaged with the industry. The minister said that a fixed rate of return to the IPPs is also a problem and a lot of things have to be done to fix the economy and attract investment, otherwise, the economic problems would persist.

The committee asked the finance minister for a briefing on the devaluation of the rupee and the country’s economy. The members of the committee wanted to know whether the government was working on anything to provide relief to the people with regard to electricity bills.

The SBP deputy governor told the committee that the regulator has to follow a market-determined exchange rate as this was agreed with the IMF that the SBP would not influence the market. He acknowledged the considerable difference in the open market and the interbank rate.

Senator Mohsin Aziz raised the issue of “capacity payment” which currently stands at Rs1.2 trillion, being paid to the IPPs, and advised that the government should reconsider its agreement with them.

Senator Sherry Rehman said that the situation in the country has become serious and the people cannot pay the electricity bills. She added that taxes on electricity bills in Pakistan are the highest in the region. She wanted to know whether any discussion was held with the IMF with regard to providing relief to the people on electricity bills.

She said that there is news of two more surcharges to be imposed through electricity bills and wondered how the average consumer would pay these surcharges.

Rehman said that as the caretakers do not have the power to decide and that is why her party is asking for an elected government to undertake decisions to deal with the discontent of the people,

The senate body was also briefed on Azad Jammu and Kashmir (AJK) budget by the AJK premier, Chaudhry Anwarul Haq. He said that the AJK produces approximately 2,600 MW of electricity each year, with a consumption of 350 MW. He demanded of the government to provide electricity to the people of AJK at production costs and wanted the allocation of AJK share in the federal divisible share pool.

The committee, unanimously, recommended that the finance minister along with the Minister for Power should hold a meeting with the AJK premier to address the reservations expressed by the AJK prime minister. He said that the federal government has to pay 400 billion on account of net hydel profit (NHP) but no one is ready to take responsibility for this. Whereas, the Ministry of Power has deducted Rs61 billion from the AJK budget, he added.

Copyright Business Recorder, 2023