Chinese killed in Karachi led energy debt talks

ISLAMABAD:

ISLAMABAD

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that Chinese nationals killed in a recent suicide attack in Karachi were part of ongoing energy debt restructuring negotiations with the Pakistani government.

He also claimed that the Pakistan Tehreek-e-Insaf's strike caused Rs190 billion daily loss to the economy.

In a pre-recorded statement, Senator Aurangzeb said that the Chinese engineers killed in the Karachi airport attack were part of the team which was engaged in talks with the Pakistani government over re-profiling of the energy debt.

"The ones killed were the Independent Power Producers engineers with whom Energy Minister Awais Leghari and I were negotiating in terms of our request to re-profile our debt and extend (payment) maturities, so that we can reduce power tariff and provide relief to the public," Aurangzeb added.

According to the Chinese embassy, the terror attack resulted in killing of its two nationals and one sustained injuries.

Pakistan was trying to get five years' extension in repayment of its about $16 billion energy debt. It is trying to reduce the electricity price by about Rs4 per unit by delaying repayments but it may increase the debt obligation by another $1.3 billion due to extension in repayment period.

The attack has also served a major blow to Pakistan's efforts to address Chinese security concerns. Beijing has already proposed to set up a joint security company for the protection of its citizens.

Pakistan had set up two special security divisions of the army having an annual maintenance cost of Rs24 billion for the protection of Chinese commercial interests. However, so far, Islamabad has badly failed in protecting the Chinese nationals.

Beijing has now urged its citizens to reconsider travel plans to Pakistan. South China Monitoring Post reported on Tuesday that the Chinese embassy in Islamabad advised Chinese citizens to avoid travelling to the provinces of Balochistan and Khyber-Pakhtunkhwa.

"I offer my condolences to the people of China, the government of China," said Aurangzeb.

In his address on Tuesday, Aurangzeb said the engineers represented those Chinese Independent Power Plants (IPPs) who told us that they would "create a win-win situation for China and Pakistan".

 

PTI protests

 

The finance minister also claimed that the strikes and the resultant shutting down of the commercial activities caused Rs190 billion per day loss to the economy.

The finance minister claimed that Pakistan's economy incurred losses of Rs190 billion per day due to strike and strife. He said that the business activities were disrupted for three to four days, implying that the economy sustained Rs570 billion to Rs760 billion losses during the past four days.

"We face serious consequences whenever the government is compelled to shut down businesses and cities due to the law and order situation," said Senator Aurangzeb.

"In Islamabad alone, 800,000 people were affected in the last 3-4 days due to this kind of strife," he said.

Although the minister blamed the PTI for losses, the interior minister's disproportionate action to block movement from Azad Jammu & Kashmir, Punjab and Khyber-Pakhtunkhwa created more troubles. He also shut down the mobile services for three days – in a move that was highly unusual.

The finance minister said that the Rs190 billion daily losses were estimated on the basis of the GDP size, tax revenues, business disruption, export and the information technology service loss.

Aurangzeb said Pakistan's total GDP amounts to Rs124 trillion and the second quarter of this fiscal year the estimated size of the GDP was Rs32 trillion. He said that those conducting strikes should also address their issues through negotiations.

"Whether it is terrorism, strike or strife, these are the setbacks, which our country cannot afford," Aurangzeb said while urging the people to refrain from participating in activity which affects Pakistan's economy.

"We as a government remain committed to consolidate our economic position and attain a sustainable growth path," he concluded.

Meanwhile, the finance ministry has engaged the advisory services of Alvarez & Marsal (A&M) to make its Sovereign Wealth Fund operational. Aurangzeb met with a delegation led by former central bank governor Reza Baqir, who is now Managing Director of the Sovereign Advisory Services of Alvarez & Marsal (A&M).

The finance ministry said that the advisory firm would provide it expert advice and consulting support for operationalisation of the Pakistan Sovereign Wealth Fund. It did not disclose the money that the government would pay to Reza Baqir or his firm.

The International Monetary Fund (IMF) has transparency related concerns about the Pakistan Sovereign Wealth Fund and as a result the finance ministry has not yet operationalised it.

The finance ministry said that during the preliminary meeting, Reza Baqir and his team discussed their strategy and the way forward with regard to their work in line with the assigned responsibility.

Separately, Aurangzeb met with another delegation of foreign bankers, led by Barclays. The minister briefed the delegation on various policy interventions and initiatives implemented during the last 12 months to reform the economy and also gave them an overview of the growth and macroeconomic stability in key economic indicators, including twin deficits, stable currency, foreign exchange reserves, and inflation that remained "a big story throughout the year".

The finance minister said that Pakistan achieved macroeconomic stability and it also cleared the payments of profits and dividends close to $ 2 billion to foreign investors.