ISLAMABAD: The caretaker government said on Friday that gas prices have to be revised upward across the board because the government cannot afford Rs350 billion losses in the gas sector, and described fiscal stability as essential for economic stability.
This was stated by the caretaker Minister for Energy, Muhammad Ali, while addressing a press conference along with the caretaker Minister for Finance, Dr Shamshad Akhtar, Minister for Commerce Gohar Ejaz, and Minister for Information Murtaza Solangi, after the Apex Committee meeting of the Special Investment Facilitation Council (SIFC).
Akhtar said that it has been decided to operate holistically and incharge of all the ministries would be working together. She added that all the cabinet committees have been institutionalised and are in full form holding inter-governmental discussions and making sincere efforts to design a roadmap for augmenting macroeconomic stability.
She said that fiscal anchor is very essential for macroeconomic stability, adding that the government is trying to revive the economy. She added that when the structural adjustment reform programme is undertaken it would be ensured the financial inclusion programme is implemented to protect the vulnerable.
She said that fiscal coordination with monetary and external sector is being reinforced as the government wants to revive the economy.
Akhtar added that the SOEs are a burden on the national exchequer and a policy is being prepared and a central monitoring unit (CMU) is being established to support of the ministries to improve corporate governance of SOEs and entities that are ready to be taken forward for privatisation.
She stated the SOEs’ debt burden is solely on the banking system and the government is also borrowing from the system. She added that the government wanted to diversify the debt burden through the capital market which would create depth and breadth of the capital market.
Additionally, she said that the government securities would also be floated in the Pakistan Stock Exchange so that its maturity could also be stretched and the common man could also benefit from it.
She added that adulated inflows of $6 billion are for the current fiscal year including the International Monetary Fund (IMF) whose review is scheduled for November 2023.
Akhtar said, “We have to revive the economy and have to release import restrictions,” adding that efforts would be made to bring all the inflows in time including those from multilateral development banks. She said at the moment we are in a reasonable position.
The size of the informal market is hard to determine and broad-based effort is going on to arrest smuggling of dollars and commodities, the minister added.
However, the Minister for Energy said with regard to the energy sector the discussion was both about power and petroleum sectors.
The major issues in the power sector discussed were how to reduce electricity cost, to provide incremental supply to the industry during the winter on a tariff that does not increase capacity payment, and how to improve governance of DISCOs, whether these are to be handed over to the provinces or privatised.
He added that with regard to governance, the first step is to strengthen DISCOs board and management and how a mechanism is created that electricity is directly provided by power plants to the industry by paying wheeling charges.
He said that exploration in the gas sector faces problems due to circular debt, as well as, security and price issues in the sector. He said that the annual Rs350 billion loss in the gas and upstream sector has increased the gas circular debt has reached the mark of Rs2,700 billion including interest cost.
As a result, he said that in the last 13 years, many exploration companies have left the country. Now the country depends on the import of RLNG to meet the needs of industry, especially in the winter. The proposal of dividends to deal with the gas sector circular debt is under discussion with the IMF. We have discussed in the meeting the security issue, when it comes to exploration of gas in the country, he added.
The Minister for Commerce, Gohar Ejaz, said that collectively market is shrunk by $30 billion as the imports decreased subsequent to the policy adopted by the government to control the economy, which led to a shortage of raw material. He said that during the meeting, the focus was on opening the economy to address the issues of inflation, unemployment, and exports by reviving them.
He said that a detailed discussion was held on three major factors: raw material issue, gas supply to the industry to revive the industry, and exports.
He said that an increase in exports would bring about economic stability in the country. He said how smuggling has been hurting the economy was also discussed during the meeting.
He said that there are two million tonnes of surplus sugar in the country and this stock is sufficient till the coming crushing season but the only issue was to prevent smuggling.
Murtaza Solangi said that the meeting held detailed deliberation on the issue of reducing government expenditure, circular debt restructuring of the FBR and removal of hurdles in foreign direct investment as well as PSEs privatisation and preventing smuggling of dollars and goods.
The interim government is empowered to privatise SOEs and DISCOs and would do so, said Solangi in response to a question.
Copyright Business Recorder, 2023