Entire govt responsible for power crisis: Shaikh

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ISLAMABAD: The government should acknowledge that it has failed to bring about any improvement in the power sector even after pouring a staggering sum of Rs 1.4 trillion, Finance Minister Abdul Hafeez Shaikh is reported to have advised the government.


On top of that, the government estimates that the power sector will consume about Rs150 billion in the coming five months to ensure a supply of about 13,000MW to offset an expected decline in hydropower generation and gas shortages.


A senior finance ministry official in a background briefing said this would be one of the key factors in expanding the country’s fiscal deficit, which had provisionally been estimated at about 1.3 per cent of GDP in the first quarter of the current fiscal year, almost at the same level in the last financial year that finally concluded at 8.53 per cent.


He said that while inflows of about $680 million from the United States on account of coalition support fund was certain to materialise during the current fiscal year, the realisation of over $800 million estimated on account of auction of third generation telecom licences remained a question mark.


“They (the telecom ministry and regulator) let us down last year and are moving on the same pattern,” said the official, adding that the team working on auction of telecom licences had not been able to appoint even a consultant for the exercise despite a lapse of over five months.


In reply to a question, the official said that a tax amnesty scheme proposed by the Federal Board of Revenue for whitening of black money that was estimated to yield over Rs170 billion had not taken off so far “because it was insufficiently developed” and required a lot of homework.


He said the scheme had still not been presented to the finance minister in a manner that could even be considered for formal discussion and approval.

The amnesty scheme involved legal and practical ramifications that could not be cleared for implementation by the finance minister alone unless approved by the Economic Coordination Committee of the cabinet or the federal cabinet, he added.


The official said that during a discussion on the economic situation at a meeting of the federal cabinet, some members suggested providing diesel and fertiliser at cheaper rates to support the farming community as was being done in some of the neighbouring countries.


GENEROSITY: He quoted the finance minister as telling the cabinet that different governments had different economic priorities. In Pakistan, the government had provided over Rs1.4 trillion to the power sector and even then the situation could not improve. “We should collectively take responsibility for this failure,” the minister was quoted to have said.


This was too big an amount and Pakistan was being dubbed as overgenerous in providing subsidies by international agencies.


Hence, the government decided to identify the poor for direct financial support and adopted the Benazir Income Support Programme. The scheme was providing cash grants to over 3.5 million families.


Moreover, it was a collective and well-intentioned decision to provide over Rs800 billion additional funds to four provincial entities to strengthen the federation and improving living standards at the grassroots level.


The official said hydropower generation was expected to drastically come down to about 1,000MW against a capacity of about 6,700MW when the provinces went on an annual canal closure from Dec 25 to Jan 31. At the same time, the domestic demand for natural gas would also increase manifold, creating a wide gap which would need to be bridged through additional imports of furnace oil.


A committee, led by the finance minister, has been asked by the prime minister to take stock of the situation on a fortnightly basis and finalise by next week how much of additional quantities of furnace oil would be required to maintain a power generation level of 13,000MW.


Initial estimates put an additional fiscal requirement of about Rs150 billion for winter.


Courtesy:  Dawn

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