Pakistan assures IMF of checking electricity theft, privatisation of Discos
Business
A transaction advisor would be appointed by the end of April to start the process
ISLAMABAD (Dunya News/Web Desk) – As the International Monetary Fund (IMF) is pressing ahead with its demand for introducing reforms in the power sector, the caretaker government has shared a plan with the world’s top lender as part of the conditions set under the $3 billion stand-by arrangement, which is set to expire on March 31.
The focus of the plan is to control electricity theft – a major factor contributing to the circular debt and higher tariffs to bridge the losses suffered by the distribution companies (Discos).
Earlier, the IMF said the recent increases in electricity and gas tariffs were important to shore up energy sector viability, but stressed the need of broader reforms to tackle the issue structurally.
Read more: IMF hails increase in Pakistan energy tariffs, says economy is on the right track
“Timely implementation of scheduled tariff adjustments and broader reform efforts are critical to restoring energy sector viability,” the IMF noted as it praised Islamabad for achieving the targets set for the first quarter of 2023-24.
In this connection, special police force would be established in all the Discos besides introducing an effective and independent monitoring system to check their working.
The document presented to the IMF promises introduction of required laws to check the practice of power theft, thus making the required steps an institutional status.
With the budget deficit being the main concern, the government has also promised, as part of a raft of measures, to collect another Rs18 billion each month through additional taxes on a variety of items ranging from sugar to consumer goods.
It means Islamabad will manage another Rs90 billion in revenue generation during the remaining five months of the fiscal year 2023-24, after missing the original targets, which resulted in its inability to bridge the budget deficit.
PRIVATISATION
Reducing the government role is one of the main IMF demands, which covers not only the state-owned enterprises (SOEs) but also the power distribution companies as a part of the structural reforms in the energy sector.
That’s why the caretaker government has informed the IMF that a transaction advisor would be appointed by the end of April to ensure inclusion of private sector and privatisation of discos.
Reforms in energy sector would reduce the distribution cost, the document says while ensuring the IMF of improving the working, capacity and governance of power distribution companies.
