The fiscal deficit projected at 7.6 percent of GDP during the first review of the IMF programme envisaged lower tax collections of Rs 5.23 billion (against the budgeted target of Rs 5.5 trillion) however the IMF now insists the revised target be Rs 4.9 trillion while the government has indicated it would not be able to generate more than Rs 4.7 trillion.
The government envisages Rs 300 billion on account of privatization of two RLNG based power plants however sources said that completing the process till the end of the current fiscal year would be a challenging task. Sources in the Privatisation Commission stated that the December deadline has already been missed and now the PC is under immense pressure to complete the transaction by April 2020.
With only four months left in the current fiscal year the Privatisation Commission has yet to begin the bidding process of the plants as there are various issues pending with the Power Division, Petroleum Division and National Electric Power Regulatory Authority (NEPRA) despite eight meetings of the Transaction Committee for privatisation of two power plants.
Under the existing legal arrangement for both RLNG power plants, there is a minimum guaranteed off-take of 66 percent of LNG imported from Qatar on an annual basis. Pakistan has signed a gas deal with Qatar for 15 years on a "take or pay" basis and it cannot be renegotiated for 10 years, which will end in 2025.
The Privatisation Commission floated Expressions of Interest (EOI) in November 2019, inviting local and global investors for the acquisition of the two RLNG 2,500-megawatt power plants. A dozen global and local companies were pre-qualified. Investors from Japan, Thailand, the United Kingdom and Malaysia came forward and submitted statements of qualification. However, as they are new to Pakistan, they are seeking more time before participating in the bidding process.
Privatisation Commission has placed five entities on the active list of privatisation including two RLNG-based power plants. Other transactions on the list are SME Bank, Services Hotel Lahore, Convention Centre Islamabad, second public offering (SPO) of Oil and Gas Development Company or Pakistan Petroleum Limited (PPL).
In September 2019, the government received $224.6 million (Rs 35.262 billion), separately from two cellular companies as their license renewal fee. The government has approved renewal of licenses of two mobile operators at $450 million each while the third operator would have to pay $470 million. The court has directed both the operators to deposit half of the amount i.e. 50 percent as guarantee till the final decision on the appeal of both cellular operators.
The government is also banking on higher than budgeted SBP profits to meet its Rs 1500 billion additional non tax revenue target in the current year. Sources told Business Recorder that the target as in other instances appears to be too optimistic if not downright unrealistic.