IMF asks govt not to allow subsidy on imported LNG

ISLAMABAD: In a new development, the International Monetary Fund (IMF) has asked the Nawaz government not to pass on any subsidy on the imported LNG to consumers and charge from them the full cost of the commodity, a senior official at the Ministry of Finance told The News.
The Fund has also asked the government in clear terms to cap the circular debt at Rs250 billion and reduce it with every passing month.The donors and international financial institutions (IFIs) have since long been asking the Pakistan government to reduce the subsidy in all sectors of economy, particularly the energy sector, so that the power system could stand on its feet.
The official sources said that donor agencies had now asked the government in plain words to reduce the volume of subsidies in the forthcoming budget for 2015-16 and cap the circular debt at Rs250 billion, but the circular debt has increased up to Rs269 billion, which will attract criticism from the IFIs.
The Fund, the official said, wants Pakistan to notify or implement that it will not ensure any subsidy or extend any hidden facility to consumers as it will expose the energy sector to more inefficiencies. The power sector is currently facing Rs269 billion circular debt whereas its receivables have increased to Rs579 billion.
Under this scenario, the IMF’s demand asking for full recovery of imported LNG cost is in the interest of the country. The official sources said that the Cabinet Committee on Energy (CCE) had already recommended the government not to extend any kind of subsidy on re-gasified LNG to its consumers. Now the decision making body — the Economic Coordination Committee — is yet to endorse the recommendation of CCE and notify the decision.
When contacted, Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said that on imported LNG, the government will recover its full cost and will not extend any kind of subsidy to its consumers.