ISLAMABAD: The caretaker government Friday announced it will have to hike the gas tariff for all categories in order to curb the annual losses of Rs350 billion. The gas sector circular debt coupled with interest payment has already climbed up to Rs2,700 billion.
Minister for Finance Dr. Shamshad Akhtar also unveiled a plan for continuation of opening up the economy and allowing imports without any restrictions and stated that Pakistan was expected to secure $6 billion from multilateral developmental donors (MDDs) for the whole financial year, including the World Bank, Asian Development Bank and International Monetary Fund (IMF).
This projection has set alarm bells ringing mainly because the IMF has projected external debt repayments of $23 billion and a current account deficit at $6 billion, so in totality the country requires $29 billion. If all rollovers from bilateral creditors are included in it, even then the inflows of $6 billion would be insufficient to maintain the foreign exchange reserves held by the SBP at the existing level of $7.7 billion as of September 1, 2023. “In the last 13 years, there has been no progress on exploration of gas and petroleum due to which the international companies such as British Petroleum and ENI have left Pakistan. We will have to find out sustainable solution. The gas sector loss on per annum basis stands at Rs350 billion, so its tariff will have to go up,” Minister for Energy Mohammad Ali said while addressing a news conference at the PID center here.
Flanked by Minister for Information Murtaza Solangi, Minister for Finance Dr Shamshad Akhtar and Minister for Commerce Ejaz Gohar, Ali disclosed that the circular debt of gas sector had risen to Rs2,700 billion with a surge of Rs350 billion per annum losses.
He said exploration of gas and petroleum had reduced significantly, causing losses of $3.5 billion. The onshore blocks bidding would be opened in November this year while offshore 24 blocks would also be opened for exploration. He said security problems, unreasonable pricing and accumulated circular debt created difficulties for undertaking exploration of oil and gas at an accelerated pace.
“There is no other solution but to revise upward the pricing mechanism,” he said and added that out of accumulated circular debt of Rs2,700 billion, almost 70 percent could not be repaid to exploration companies.
To another question about the much-expected relief in electricity bills, the minister for energy said they were still awaiting the nod of IMF and the relief announcement was expected next week, probably on Monday. He said everything could not be fixed overnight, so gas prices would have to be increased.
He said there was shortage of oil and gas to the tune of $3.5 billion, so the country would have to rely upon on imported fuel.
Dr Shamshad Akhtar said the macroeconomic situation was difficult, so the economic management was aimed at navigating the economy by jacking up domestic resource mobilization. She said the FBR’s restructuring would be done and Special Investment Facilitation Council (SIFC) was assigned to come up with proposals to introduce reforms in the FBR.
She said expenditures would be curtailed to cut down fiscal deficit. The state-owned enterprises were facing losses and debt burden, so debt would be secured through capital markets and government securities would be secured through stock markets in order to deepen and diversify markets.
Minister for Commerce Ejaz Gohar said exports and remittances would be jacked up to create space for allowing imports without any restrictions. He said incremental package and direct supply for industries would help industries jump-start economic activities and create jobs. The smuggling of dollars and commodities would be curtailed at all costs. He said there were sufficient stocks of sugar and its smuggling had been curtailed.
Minister for Information & Broadcasting Murtaza Solangi said the last government introduced legislations and empowered the caretaker government for taking decisions so they would take all such crucial decisions.
Meanwhile, the fifth meeting of the Special Investment Facilitation Council (SIFC) Apex Committee was held here on Friday with singular focus on improving the overall business and investment environment in the country for ‘economic revival’.
The meeting was chaired by the caretaker Prime Minister Anwaar-ul-Haq Kakar and attended by Chief of Army Staff General Asim Munir, federal cabinet, provincial chief ministers and high-level government officials.
The ministries concerned presented their plans and roadmaps to overcome the macroeconomic challenges, governance related impediments and voids in regulatory mechanisms in a bid to attract both foreign and domestic investment, and stimulate economic growth, a statement issued by the Prime Minister’s Office said.
The committee deliberated upon various measures to be taken in short, medium and long-term to reap the envisaged dividends. The practical steps deliberated upon by the meeting were approved by the prime minister that would be operationalized as soon as possible.
The prime minister asked the ministries to deliver optimal results irrespective of the time that was available with the interim government and emphasized the need for laying a strong foundation for the future government.
