ELECTRICITY AND PETROLEUM PRICES
ADDING TO POVERTY LEVEL IN PAKISTAN
Sep 21 - Oct 04, 2009
Government has planned to address the chronic issue of load shedding by the end of 2009 for which it has allowed some fast track power generation projects in the form of rental power projects which according to figures would add at least 2250MW in the national grid within the stipulated time frame.
Actually, the pace of socio-economic development was hurt on many accounts in Pakistan but the top contributor to the deterioration of socio-economic growth was the poor power supply which definitely still comes on top of all odds.
In fact the beginning of electricity crisis especially in Karachi stemmed from the ban imposed on KESC for enhancement of generation capacity in early 90s. The power generation capacity of the KESC was capped by the government in view of the privatization plans of the government.
Since many governments in the past failed to get what it was called the white elephant rid of deficit, KESC is incurring losses of around Rs1 billion every month.
On one hand there was a cap on enhancing power generating capacity on KESC while on the other hand the demand for power was constantly rising in the backdrop of rapid industrial and economic growth.
The power situation would have been quite different if the government had not imposed the cap on power generation capacity. It was the folly of the then government to take such a stupid decision.
In the face of growing demand in Karachi, KESC was left with no choice but to borrow electricity in tit bits from different sources including WAPDA, two small IPPs in its franchise area, Pakistan Steel, KANUPP and other sources. However the utility company supposed to cater to the electricity needs of Karachi having a population of over 17 million besides having the largest industrial consumer base of the country cannot deliver services unless it has its own power generation capacity instead of surviving on borrowed sources.
One of the factors which adversely hit the energy sector of the country was circular debt running in billions of rupees which resulted in acute liquidity crisis in power generating companies in the private sector as well as in the fuel supply companies.
It sounds interesting that despite widespread load-shedding continued to persist, the government under the political considerations provided electricity to more than 6,400 villages for the first time during 2008-09. Actually it was lack of planning and good governance, otherwise the village electrification program especially while the entire national economy was on stake due to power shortage, should have used alternative energy resources like wind power, solar energy or bio-gas with a view to protect the economic interest of the urban areas.
RETIREMENT OF INTER-CIRCULAR DEBT
Sources in energy sector have confirmed that the government has reached an agreement with banks for issuance of a 2nd Rs85 billion Term Finance Certificate (TFC) to pay down the outstanding dues of independent power producing companies as well as oil marketing companies in the power chain.
Actually the TFC of Rs85 billion was planned last month but it was delayed due to some difference of opinion among the member of banking consortium over rate of return on the financing being provided by the financial sector.
Hopefully, after the settlement of the account, the power generating companies would be putting their power plant in to full capacity to reduce the gap between demand and supply in the country.
It is also learnt that major share of the energy fund of Rs85 billion will go to oil marketing & refining companies as they are the epicenter of the inter-corporate debt issue.
According to informed sources, the lion's share would go to PSO which has to receive the major chunk of the total TFC as PSO's share was estimated Rs40-50bn or 50% of its outstanding receivables. On the private power producers front the Hubco & Kapco have a claim for Rs57billion that is 72% of Wapda's outstanding liability.
The release of funds are sure to release the tension of a number of power producers and oil supply companies soon after Eid-ul-Fitre, which is likely to help improving power supply situation in the country.
One of the reasons for creating power shortage seems to press the government for early recovery of the stuck up dues for over two years which certainly had created a chain reaction on the financial health of the stakeholders in the power sector.
It is interesting to note that IMF was more concerned that the government got rid of circular debt at earliest. So much so International Monetary Fund used its position for clearance of the dues owed to the power and full supply companies.
It may be recalled that the French Finance Minister had advised the IMF to mend its what he described the "imperialistic style" while dealing with the borrowing countries.
The high rate of inflation was further aggravated with the IMF conditions to phasing out subsidies on power sector. Actually the root cause for aggravating inflationary pressures especially the food prices were ignited by the high electricity, petroleum, and flour prices (sold at Rs40 per kg and being slipped out of hands of average income group). It is feared that if the price inflation is not contained, more and more people would fall below the poverty line in Pakistan. The secret of power reduction lies in low prices of energy including electricity and petroleum products which always have a multiplier effects on general prices.
"NADRA TO SERVE CITIZENS ABROAD
NADRA workforce especially women have played a pivotal role in registering the womenfolk of the country. Over 1200 female workers are already serving the nation while to cater the need of overseas Pakistanis; NADRA female staff will serve the Pakistani citizens abroad in United Kingdom, Dubai and UAE, this was stated by Tariq Malik, Deputy Chairman NADRA. "This will promote Pakistan's soft and modern image in the world," he added.
He said NADRA has adopted a fair and equal employment policy to empower the womenfolk; however, they have to go through selection criteria of test and interview to determine the merit. The initiative to bring women folks into mainstream was the vision of Shaheed Mohtarma Benazir Bhutto, and this decision of NADRA management is a step forward to transform that vision into reality, said Malik. He said empowered female would be able to earn the bread for their families in a respectable manner. He said 40 female are working in NADRA in the officer cadre.
He informed that to cater the needs of overseas Pakistanis NADRA has recently appointed Ms. Qaisara Majeed from Sahiwal, Punjab, as Camera Person, in NSRC London, Ms.Fozia Fiaz from Sargodha, Punjab, as Examiner, Birmingham, UK, Ms.Shahnaz Akhtar from Attock, Punjab, as Camera Person, Manchester, UK, Ms.Memoona Saeed from Faisalabad, Punjab, as DEO, Dubai, UAE, Ms.Fatima Salim from Jhelum, Punjab, as SRC Supervisor, Abu Dhabi, UAE and Ms.Sana Illahi from Khanewal, Punjab, as DEO, Reserve. He said NADRA female staff working abroad will facilitate overseas Pakistanis to get their identity cards.
PAKISTAN'S LIQUID FOREIGN RESERVES POSITION
The total liquid foreign reserves held by the country stood at $ 14,360.7 million on 12th September, 2009.
The break-up of the foreign reserves position is as under:-