Reporting about a 20 percent increase in peak summer electricity demand, the govt on Wednesday sought approval for an approximately $400 million energy sector loan by the planet Bank (WB) by the end-September.
A senior government official told Dawn that a gathering of WB’s Board of Directors is predicted on September 27 and therefore the authorities are making efforts to deal with outstanding issues including finalization of the Circular Debt Management Plan (CDMP) beforehand to make sure smooth sailing.
Informed sources said a visiting WB delegation – led by its vice-chairman for South Asia Hartwig Schfer – had a gathering with Minister for Energy Hammad Azhar and Minister for Planning Asad Umar. the 2 sides discussed the newest situation on CDMP and asked their respective technical teams to finalize a suitable plan for the board approval at the earliest.
Mr. Hammad told the WB delegation that around 20pc increase in peak demand for electricity has been registered this summer which was an honest omen for the energy sector and therefore the economy. He sought the bank’s support to reinforce the capacity and modernize the transmission network.
An official statement said the minister told the delegation that thanks to effective measures by the govt the expansion in circular debt was being curtailed to a substantial amount. During FY21, around Rs130bn was added to the circular debt which was some Rs408bn less than in FY20.
“The Power Division has planned an addition of considerable capacity within the existing transmission network by the top of FY22 that funds have also been allocated,” the statement said. About Rs120bn worth of funds for transmission networks are a part of the general public Sector Development Programme. Mr. Azhar advocated the “importance of WB’s assistance in expansion and modernization of Pakistan’s electricity Transmission System”.
On the occasion, Mr. Schfer acknowledged the slowdown in the growth of circular debt and renewed the commitment of WB to continue working with the govt within the energy sector, the energy ministry said. The WB official acknowledged Pakistan had the potential of achieving a rate of growth of 6-7pc and involved closer working between the experts’ group of the 2 sides to deliver on targets.
Informed sources said the govt had been battling the revised CDMP following the political decision to withhold about Rs1.40 per unit average increase in consumer tariff a couple of months ago despite a commitment with the WB and therefore the International fund.
Of late, the govt has made some procedural progress by securing powers through amendment within the Nepra Act to impose a surcharge on electricity and filing of petitions before the facility regulator to extend various consumer slabs and subsidy rates. the facility Division and Finance Division are divided over the fundraising through tariff and subsidy adjustments.
For the current fiscal, the facility Division had figured out the facility sector subsidy of about Rs501bn and received about Rs331bn subsidy allocations from the Finance Division within the budget. the facility Division has reported about Rs170bn shortfall on this account which has got to flow to the circular debt.
To revive the energy sector loans direly needed for the balance of payments, Minister for Finance Shaukat Tarin had recently written to the WB to deliver on GOP commitments. Officials said a subsequent tariff increase was being planned for implementation after mid-September. within the meanwhile, however, the circular debt had been reconciled at about Rs2.33 trillion as of June 30, 2021. the facility Division claims that a serious part of this increase was thanks to unbudgeted and unpaid subsidies.
The WB delegation was informed by the design minister about the govt plans to revamp the Pakistan Bureau of Statistics to modernize the statistical system and enable it for high-frequency data generation.
Mr. Umar said the PBS would even be conducting the first digital census in 2023 and expected the WB’s technical assistant during this regard. The WB VP involved faster and sustainable reforms.