The clamorous rhetoric by the government ministers that energy crisis will be resolved within specified time could not provide fuel to electricity generation efforts. But a recent report by International Monetary Fund has revived the hopes that energy situation will improve provided the government continues to maintain the current pace of reforms. Before endorsing the 11th review of a three-year $6.4 billion Extended Fund Facility programme, the IMF not only approved the next tranche of $500 million but also observed that short-term economic vulnerabilities of the country have been reduced and macroeconomic stability has improved. With start of the three-year programme, the government started energy sector reforms, reduced electricity load shedding and line losses as well as improved collection of payments and strengthened the regulatory framework. The fund did not indicate in the report that the consumers were overburdened with reduction of subsidies and introduction of surcharge for recovery of cost. However, the fund admitted that the process for notification of the electricity tariffs and for setting up multi-year tariff frameworks for the distribution companies have been advancing during the outgoing fiscal year.
The IMF regrets the government decision or indecision regarding privatization of the electricity distribution companies due to political pressure and social constraints. The improved performance of distribution companies and low oil prices in the international market contained the accumulation of arrears in the power sector. The report says that the government has resumed regulatory process for determination of gas tariff and growing imports of liquefied natural gas has strengthened the supply in the domestic market. As a matter of fact, the entire electricity system in the country needs structural reforms and total overhauling to reduce line losses. Corruption is one of the major causes of electricity woes and strengthening of infrastructure as well as curbing pilferage can also improve the situation. It is unfortunate that despite adding a handsome volume of electricity to the system, the domestic, commercial and industrial consumers continue to face load shedding. Pakistani economy is on the verge of takeoff and electricity is one of the main components for the stimulation of industrial activities.
In view of planned invest from China in road and energy infrastructure projects, the fund has projected 5 percent growth in the gross domestic project of the country during the current fiscal year from a previous estimate of 4.7 percent. The government has collected record revenue in terms of duties and taxes this year and there is incessant inflow of remittances sent by the expatriate Pakistanis.The government has also achieved macroeconomic stability to some extent, therefore, it is hoped that repayment of loan installments will not be an issue for the government.
