Power tariffs raised under IMF deal: PM

LAHORE:

Prime Minister Shehbaz Sharif said on Monday that the government has increased power tariffs again under an International Monetary Fund deal, part of moves to reduce unsustainable public debt in the power and gas sector.

The price rises of up to Rs5.75 ($0.020) a unit would not impact poorer citizens, he said. Consumers of up to 200 units -- 63% of the total -- would be exempt from the tariff increase.

Besides, he said a partial subsidy was also being given to the consumers of up to 300 units per month which comprise around 31% of the total domestic consumers.

“We had to increase electricity prices because of the IMF deal,” the prime minister said after witnessing the signing of a framework agreement between State Oil company of Azerbaijan Republic (SOCAR) and Pakistan LNG Limited (PLL).

“Due to the toughest conditions from the International Monetary Fund (IMF), the government had to raise the electricity prices but I stressed that the burden should not be passed on to the protected segments of the society,” he said

The lender had pointed out that liquidity conditions in the power sector were acute, with a buildup of arrears and frequent power outages.

The arrears -- a form of public debt that builds up due to subsidies and unpaid bills -- were a major issue in the eight months of negotiations between the IMF and Islamabad before a deal was reached last month. Debts to power generation companies have accumulated to nearly Rs2.6 trillion ($9.04 billion), according to official figures, which show a separate government debt of around Rs1.6 trillion ($5.56 billion) to the gas sector.

"It is a gaping hole," the prime minister said, adding, "We have to deal with this on a war footing."

The power sector is beset by theft, which needs to be overcome, he said.

Read Power tariff hike

Under the framework agreement, SOCAR Trading has offered LNG supply to Pakistan in the form of one cargo per month, on flexible terms and with credit lines for 30 days after delivery of the cargo on one year contract which is extendable by another year.

The prime minister said it was really a great day as “we are standing here as brothers from two brotherly countries Pakistan and Azerbaijan".

Addressing the soft launching of Ombre Special Economic Zone, Sundar Green Special Economic Zone and Smart Special Economic Zone in Sheikhupura, Shehbaz said that the utilisation of modern technology and alternative energy by the industrial sector were inevitable to make exports competitive in the international market.

The prime minister said owing to surging oil prices, the only option was to exploit the potential of solar, wind, and hydel energy for cost-effectiveness of local products.

He said the issue of circular debt was required to be addressed on a war-footing basis, which was swelling due to wastage of billions of rupees annually because of line and transmission losses as well as power theft.

The prime minister appreciated the private sector for chalking out a plan to establish the three special economic zones, assuring of all-out support by the federal and Punjab governments.

He said the commitment by the private sector to attract investment worth billions of rupees was also laudable, besides their plans to set up a three-megawatt solar power plant and other allied facilities like the vocational training center.

(With input from Agencies)