Talks under way for Kazakhstan gas pipeline

Minister says electricity transmission will be over 30,000MW by next year

ISLAMABAD:

Energy Minister Hammad Azhar on Saturday said discussions were under way with Russia to bring a gas pipeline from Kazakhstan, which will be cheaper than the imported LNG.

“We are working on substitutes as the local reserves are depleting,” he added while addressing a news conference in Islamabad.

“Laws are being made to mix imported LNG and imported gas with locally produced natural one to ensure supply to the domestic consumers in country.”

He said the gas brought from the pipeline from Kazakhstan would be expensive than the local one. “Therefore, this will require pricing mechanism.”

The minister said the government had recently introduced legislation of weighted average price of gas.

“The government had no legislation earlier to price gas if LNG was mixed with indigenous gas.”

He added that the National Assembly has passed this law a day earlier and this was a “historical moment”.

“We will now pursue it in Senate.”

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The minister said the present government had introduced historic reforms in different sectors including energy.

He highlighted that the State Bank Amendment Bill was essential in wake of the “politically motivated damage” done to the economy by the finance minister of the last government, referring to PML-N’s Ishaq Dar.

The minister claimed that this legislation will free the central bank from politicised decisions.

“While it is being politicised, but the autonomy of the State Bank is very important. The regular boom and bust cycles in the country has strong links with the autonomy of the central bank,” he added.

“State banks are autonomous in all stable economies, but here one former deputy governor was involved in money laundering for the finance minister,” he claimed, again referring to Dar.

Without naming anybody but in an obvious reference to Dar, he maintained that there was a time when the finance minister would make a call to the State Bank governor and give directions on the exchange rate.

“The SBP governor would use the loaned dollars to execute the directives given by the finance minister to maintain the exchange rates artificially,” he added.

“But in return, the foreign exchange reserves continued to decline. The country was flooded with imports and enhanced foreign debt.”

Hammad claimed that now there were market-based exchange rates. “The reserves are not used to maintain the exchange rates artificially.”

The minister further maintained that exports were being made competitive.

He rejected the impression that there was any risk to national security and pointed out that the governor, deputy governor and board of directors of the central bank would be appointed by the government.

He added that there was no need to give the political colour to the bill granting autonomy to the State Bank.

“Even the PML-N tried to present such a bill in 2015 but did not follow it themselves.”

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The minister noted that Pakistan had not been performing well over complying with the Financial Action Task Force (FATF) conditions.

“The country has been in the grey list, but the reforms taken by the present government have been acknowledged by the world. [A total of] 26 out of the 27 reform agendas have been achieved by the government in a record time.”

He highlighted other reforms taken by the government which included separation of customs from the Federal Board of Revenue (FBR) and tax policy, and it had resulted in the import of cheap raw material.

“Earlier, the customs policies were used to enhance tax revenues but it resulted in de-industrialisation,” the minister said.

“Now since the ministry of commerce will drive the customs policy, around Rs200 billion worth of input has been made. It has resulted in strong growth of industrialisation and the large scale manufacturing witnessed a growth of 12% in the last fiscal year, improved exports and reversal of de-industrialisation.”

He added that these measures had supported the stabilisation of the economy and expressed the confidence that the exports would touch $30 billion in the ongoing fiscal year.

“Our tax collection and exports are increasing as a result of better policies. We target to collect Rs6 trillion in taxes during the current fiscal year. Our GDP growth will be 5% in addition to $30 billion in remittances.”

Hammad maintained that the previous government had focused primarily on power generation and not on the transmission system, creating bottlenecks in the electricity supply.

The minister added that PIT-led government was focusing on improving transparency in the electricity generation as well as the transmission system.

“The previous governments made decisions on the take or pay basis giving enormous risk free benefits to the investors of their choice. But now we have introduced transparency in the whole affair, through a competitive open auction system.”

He said the maximum electricity transmission in the last era was 20,800MW.

“However, we already crossed that mark last summer and in 2023, the electricity transmission would be more than 30,000MW.”

The minister also informed the media that the transmission of electricity had started from the phase II of Neelum–Jhelum Hydropower Project and Karot Hydropower Project.

“Electricity will be supplied to Gujaranwala and Sialkot regions from there.”

 The minister blamed too much reliance on imported fuel for the issue of fuel cost adjustment. “It is because of lack of long-term policy making by the previous governments.”

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The minister claimed that around 70 to 80% of electricity would be produced from indigenous resources by 2030, either from hydel resources, renewable or local fuel.

He also highlighted that the government had smashed all cartels in the agriculture sector.

He added that the farm economy was strong and the result was visible in high off-take of urea.

Responding to a question about the complaints by Sindh on the Sui Southern Gas Company, the minister said that the provincial government there was used to issuing “non-serious” statements.

“It has always used the ‘Sindh card’.”

The minister claimed that Sindh was already consuming the majority of gas produced in that province.

“Industries in Punjab were consuming gas at five times the rate applicable to those in Sindh.”

Responding to a query about reports of an argument with Defence Minister Pervaiz Khattak, the minister said the PTI was a democratic party.

“Arguments are part of democratic norms. We are not one of those parties where top leaders cannot even speak in front of any child of a party leadership,” he added, referring to the PPP and its chairman Bilawal Bhutto Zardari.