ISLAMABAD:Pakistan has assured the International Monetary Fund that it does not plan to allocate additional budget to settle the Rs493 billion dues of Chinese power plants. The global lender is also questioning the efficacy of the power sector’s anti-theft campaign.
The government also faced questions about a record Rs7 per unit increase in electricity prices in March due to the energy ministry’s faulty policy of using expensive imported fuels, according to sources.
The Fund is sceptical about the government’s claim of restricting losses due to non-recovery of bills to Rs263 billion in this fiscal year, as the amount has already almost reached Rs200 billion in just seven months. This has serious implications for restricting the overall circular debt to Rs2.31 trillion by June this year.
The IMF inquired about the government’s decision on the allocation of funds for the Chinese power plants over and above the budgeted amount of Rs48 billion for this fiscal year, said officials of the Ministry of Energy.
They added that the IMF was informed there was no plan to approve additional funds for retiring the outstanding debt of the Chinese power plants.
The outstanding dues of power projects of China-Pakistan Economic Corridor (CPEC) alarmingly increased to a record Rs493 billion or $1.8 billion as of end January. The amount was Rs214 billion or 77% higher than June last year.
The build-up of Chinese debt violates the 2015 Energy Framework Agreement, which binds Pakistan to allocate sufficient money in a special fund to keep Chinese investors immune from the circular debt. However, the government is allocating only Rs48 billion annually with a condition to withdraw a maximum of Rs4 billion per month.
Sources said the IMF appeared sceptical about the long-term success of the government’s anti-theft campaign and the military’s involvement in monitoring the performance of power distribution companies.
Energy ministry officials said the IMF believes the anti-theft campaign can work only in the short term and the government needs to focus on digital monitoring of the power distribution network.
