Gaping void in Q Block

The 20 Independent Power Producers (IPPs) have once again brought it to the notice of the government that the verified and audited amounts due to them have crossed 195 billion rupees comprising 5910MW (not inclusive of the overdue amounts of the remaining IPPs on 2366MW) which accounts for severe liquidity problems that, in turn, would compromise their ability to produce at capacity resulting in an increase in load-shedding. The IPPs also reminded the government that International Arbitration ruled in their favour and awarded them 14 billion rupees for unduly withheld amounts by NTDC in 2011-13 with interest accruing at 120 million rupees per month.
Recent history between the IPPs and the Water and Power Ministry has been acrimonious with former Water and Power Minister Khwaja Asif referring to the IPPs as robber barons while delivering a policy statement in the Senate in 2015; and subsequently dismissing the demand of the over 36-member Independent Power Producers Advisory Council (IPPAC) to clear their dues in May 2017 or face their "shutdown" as an 'illegal' entity. However, sources revealed to Business Recorder at the time that the Water and Power Ministry had requested the Ministry of Finance to release 50 billion rupees to pay outstanding dues to the IPPs, and that as soon as the money was available it would be released to the IPPs.
Till end July 2017 verdict on the Panama Papers case, finance minister Ishaq Dar had been proactively engaged in all decision-making in all the ministries/departments with financial implications and had, on several occasions, summarily refused to disburse the requested amount to the Power/Petroleum Ministry that accounted for a severe petrol shortage in January 2015, periodic load-shedding during the past four years and, last but not least, the award in favour of the IPPs by International Arbitration in 2017.
The IPPs have also contended that the government raised the GST on furnace oil, their major input, from 17 to 20 percent in October 2015 whereas GST on electricity was kept at 17 percent that led to a systematic build up of GST refunds - estimated at 130 billion rupees which are not being processed by the Federal Board of Revenue (FBR). Again it is relevant to note that Dar's policy was to raise taxes on those products that reflected ease of collection and the unwritten policy followed by the FBR was to delay refunds to show revenue collections higher than was in fact the case - a policy that Dar certainly did not initiate though he did continue it.
There are therefore clear indications that while the Water and Power Ministry (merged into a Ministry of Energy in August 2017 by the newly-elected Prime Minister Shahid Khaqan Abbasi) has failed to eliminate the stock of circular debt or its flow yet the Finance Ministry has played a critical role in upsetting the power sector applecart through its flawed tax and refund policies. Thus just from the perspective of the power policy for a finance minister to remain unengaged with decision-making could play havoc with electricity supply that would not only have negative financial implications for the country but also on the political aspirations of the ruling PML-N.
The statement by the Special Assistant to the Prime Minister as well as his spokesman Musadiq Malik that in the absence of any federal minister the portfolio is automatically held by the Prime Minister is facile at best and downright disingenuous at worst. Those who claim that the decision-maker is not the incumbent but the former prime minister who has reportedly not yet taken any decision on appointing a more qualified and proactive finance minister must accept that whatever the ground realities the buck, in the minds of the general public, stops with the incumbent.
There is speculation in the federal capital that a council of well-known economists may be set up to take decisions on economic matters; however, this idea is simplistic as there is no agreement between economists as to the precise measures to be taken to extract the Pakistan economy from its myriad problems. Or in other words, a chairman of the council would have to be appointed to take the final decision and that individual must have the vote of confidence of the cabinet and the rest of the council members. In short, a finance minister is required to be appointed on an urgent basis.