Day: July 25, 2022

ISLAMABAD: The most celebrated monk from Thailand, Arayawangso has asked the Buddhists across the globe to visit the religious and heritage sites in Swat, Khyber Pakhtunkhwa.

This he stated after visiting the Buddhist sites in Swat along with his twenty disciples. The Buddhist monks’ delegation, which is on visit to Pakistan for a three-month Rain Retreat Program, visited Swat Museum, Saidu Sharif Stupa and Butkara Buddhist Monastery where they worshipped.

According to a Radio Pakistan’s report, Monk Arayawangso and his disciples will be doing meditation and research in Taxila, Swat, Takht Bahi and Peshawar valley during their stay in Khyber Pakhtunkhwa.

ISLAMABAD: The power sector of Pakistan has been badly incapacitated by the grave issues of circular debt, which is reflected in the continuous electricity tariff hikes and skyrocketing fuel price adjustments.

Not only the National Electric Power Regulatory Authority (NEPRA) has approved a Rs11 per unit tariff hike for the high-end consumers on the request of the Ministry of Energy, the “flat slab rates” mechanism also has been implemented, burdening the low electricity consumers substantially.

This was discussed during a meeting held here at the Institute of Policy Studies (IPS), Islamabad on Monday to discuss the pitfalls of the power sector of Pakistan, impacts of circular debt, resolution mechanism, and assess the roadmap to address the issues. The meeting was co-chaired by Khalid Rahman, chairman IPS, and Mirza Hamid Hassan, chair IPS Energy Steering Committee and former federal secretary, Ministry of Water and Power.

Ashfaq Mehmood, former federal secretary, Ministry of Water and Power, Ameena Sohail, member board of directors, IESCO, and legal advisor to NEPRA, Syed Akhtar Ali, energy expert, Raja Kamran, president Council of Economic and Energy Journalists, Naufil Shahrukh, IPS’ GM Operations, and Hamza Naeem and Lubna Riaz, energy researchers at IPS also participated in the meeting to assess the power situation of the country and its impacts.

It was pointed out in the discussion that Pakistan is among the countries with some of the lowest indexes of energy affordability, which has potential negative impacts on the overall economic progression. Primarily, the setting up of furnace oil, RLNG and RFO based generation facilities over the decades led to dependence on expensive fossil fuels, which caused the snowballing of fiscal deficit of payments in the power sector.

To maintain the exclusive functioning of the sector, electricity tariff hikes are being implemented, which will not resolve the problem in the short term, rather it will affect energy affordability of consumers. The speakers observed that circular debt, the core issue of the power sector, has jeopardized energy security and energy affordability in the country.

It is a well-considered fact that Pakistan’s electricity generation cost has jumped up to 160% since June last year and the government is now incapable of providing subsidies to consumers.

While the factors attributed to the ballooning circular debt were identified as the snowballing capacity payments, governance issues, inefficiencies in the distribution utilities, and fluctuating prices of fossil fuels in the international market, it was also mentioned that the burden of the debt was being transferred heavily to the end-consumers.

In the recent price hike, it was ruled that the electricity tariff has also been raised through an amendment in the protected slab system for consumers utilizing less than 200 units of electricity, which consequently, would put a heavy burden on the low-income class of the country. Whereas, on the other side, the collection of additional advance taxes through electricity bills is also a counterfactual method that would lead to major issues of energy unaffordability.

The after-effects of the new tariff hikes indicate that the applicable base tariff for those consuming 100-200 units would be Rs18.95, while those consuming 201-300 units would be charged Rs22.14, and the rate for 301-400 units has been increased to Rs 25.53, which previously stood at Rs11.74, Rs13.81, and Rs21.23.

Along with that, fuel price adjustments subject to price fluctuations of petroleum products would also be charged from the consumers. The circular debt pile currently stands at Rs4700 billion, and the speakers maintained that the contracts made on the “take or pay” mode are the primary factors for its accumulation. Meanwhile, inefficiencies and governance issues at the distribution companies have further increased the concentration.

In addition, obligations to the International Monetary Fund require cross-subsidization of the badly-hit power sector, making the conditions worse. While, due to these hikes, the resourceful sector of the society including the commercial and industrial consumers has the tendency to shift to captive power generation facilities, the distribution companies should adopt a mechanism to charge capacity payments from the consumers.

The speakers highlighted that a focused approach is much needed to control the outburst of the circular debt. They observed that management restructuring of the power distribution companies (DISCOs), energy transition towards renewable sources, competitive bidding in generation facilities, enhancing the technical efficiencies, and dividing the DISCOs into smaller units are much-needed interventions for the power sector of the country.

ISLAMABAD: Finance Minister Miftah Ismail has said the economy will be put on development trajectory and the issue of price-hike to be controlled in the next few months.

According to a Radio Pakistan’s report, he was confident that the economic targets set for the current fiscal year will be achieved as a result of better decision making by the present government. The Finance Minister, however said increasing exports could be challenging in view of looming recession in the West. We have to put in more effort to bolster our exports. He said no loadshedding is being carried on the industrial feeders to support this important sector of the economy.

He rejected the impression created by some quarters of the society that the country’s remittances, exports and tax collection witnessed decrease in recent months. He pointed out there had been record remittances in the month of May whilst the Federal Board of Revenue (FBR) also achieved its targets in the period between April and June this year.

Miftah Ismail said we have set target of enhancing the revenue by thirty five percent during the current fiscal year. He said that the FBR will collect 7500 billion rupees while eight hundred billion rupees will be collected as a levy. He said the government is supporting the productive sectors of the economy including the agriculture, industries and Information Technology to take the economy in the right direction. He said tax on seeds has been abolished whilst tax on IT export proceeds has been reduced from one percent to 0.25 percent.

About the rupee depreciation, the Finance Minister expressed the confidence that the pressure on it will reduce in the next week. Citing the reason behind it, he said we have succeeded to reduce imports. Pakistan currently stands in a position where its new imports are less than exports and remittances. He recalled there were imports of eighty billion dollars and exports of thirty-one billion dollars during the last fiscal year.

Responding to a question, Miftah Ismail said Pakistan is expected to receive the next tranche of the IMF by the end of next month after the IMF’s board meeting on 24th August. He said four to five billion dollars are also expected from the friendly countries. He said one friendly country is ready for immediate investment in the country. He said the federal cabinet has approved a law to pave way for this investment.

He said matters pertaining to the oil and gas deferred payment are also likely to be finalized with the friendly countries in a week time. He said a lot is being done to bring improvement in the power sector. The Finance Minister regretted that the previous government neither made any investment to improve the electricity transmission system nor timely completed the power generation plants.

He said the PTI government also did not sign any long-term fuel agreement and resultantly we have to operationalize those power plants which operate on expensive furnace oil. He said we will support the farmers and the poor consumers to convert to solar in order to save them from electricity bills. When asked about the problems faced by the common man due to price hike, the Finance Minister said under Sasta Petrol and Sasta Diesel scheme, relief assistance of two thousand rupees is being given to deserving families.

He said cash assistance is also being provided to deserving families under Benazir Income Support Program. He said essential commodities are being provided at subsidized rates to the consumers through the Utility Stores.