ISLAMABAD: US Secretary of State Mike Pompeo assured Pakistan last week Washington would not try to block any request for a bailout from the International Monetary Fund (IMF), Pakistani Information Minister Fawad Chaudhry said on Tuesday.
The remarks, which Chaudhry said Pompeo made during his visit to Pakistan on Wednesday, come in stark contrast to Pompeo’s warnings in July that the United States had serious reservations about the IMF giving money to Pakistan due to concerns Islamabad would use the cash to pay off Chinese loans.
Those comments rattled Islamabad, which is facing a currency crisis and may have no option but to turn again to the IMF for a rescue if staunch allies China and Saudi Arabia do not offer more loans to prop up its foreign currency reserves.
Chaudhry told Reuters that relations between United States and Pakistan were “broken” before Pompeo’s trip to Islamabad but the visit had “set many things straight” and re-invigorated ties.
“He assured Pakistan that...if Pakistan opted to go to IMF for any financial help, the USA will not oppose it,” Chaudhry said in the capital, Islamabad.
The US embassy in Islamabad did not have any immediate comment.
The new government of Prime Minister Imran Khan, who took office in August, is trying to avert a currency crisis caused by a shortage of dollars in an economy hit by a ballooning current account deficit and dwindling foreign currency reserves.
Pakistani officials say they are discussing taking drastic measures to avert seeking a bailout from the IMF, which has come to Pakistan’s rescue 14 times since 1980, including most recently in 2013.
Pakistan’s relations with the United States have soured in recent years over the war in Afghanistan and Islamabad’s alleged support for Islamist militants. Ties dropped to a new low when President Donald Trump in January accused Pakistan of lies and deceit by playing a double game on fighting terrorism.
Islamabad denies aiding insurgents in Afghanistan and lashed out against Trump’s remarks, which were followed up by Washington suspending US military aid.
At the United States’ urging, a group of Western countries in February convinced a global body to put Pakistan on a terrorism financing watch list, a move that triggered concerns the United States may also seek to block Islamabad in other forums.
In July, Pompeo said there was “no rationale” for the IMF to bail out Pakistan. Pompeo worries that Islamabad would use the IMF money to pay off Chinese loans echoes concerns by other US officials that China is saddling many emerging market countries with too much debt. Beijing staunchly denies such claims.
“There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” Pompeo said in July, referring to a possible Pakistan bailout.
But during last week’s visit Pompeo said he was hopeful of “a reset of relations” long strained over the war in Afghanistan.
Pompeo said US won’t block Pakistan if it seeks IMF bailout — Pakistani minister
Pompeo said US won’t block Pakistan if it seeks IMF bailout — Pakistani minister
- Pompeo’s trip to Islamabad has “set many things straight” and re-invigorated ties, says Pakistani Information Minister Fawad Chaudhry
- Pakistani officials say they are discussing taking drastic measures to avert seeking a bailout from the IMF, which has come to Pakistan’s rescue 14 times since 1980, including most recently in 2013
Power minister defends solar net-metering overhaul after Pakistan PM orders review
- Leghari says 466,000 net-meter users earn up to 50% returns while 35.5 million consumers bear higher costs
- NEPRA’s new rules require full grid tariffs for usage and lower, market-linked rates for excess solar exports
ISLAMABAD: Pakistan’s power minister on Thursday defended controversial changes to rooftop solar net-metering rules, arguing that generous returns for a small number of users were unfairly burdening millions of other electricity consumers, as Prime Minister Shehbaz Sharif ordered a review a day earlier.
The dispute centers on changes to the net-metering regime, under which households and businesses with rooftop solar panels can sell excess electricity to the national grid. The National Electric Power Regulatory Authority's (NEPRA) new compensation rules require consumers to pay full tariffs for electricity drawn from the grid while receiving a lower, market-linked rate for excess power they export.
Critics have called the revisions “anti-solar” and warned they would undermine renewable energy adoption and hurt household finances.
Power Minister Sardar Owais Ahmed Khan Leghari told the National Assembly that only 6,000-7,000 megawatts of Pakistan’s estimated 22,000 megawatts of installed solar capacity fall under net-metering, covering around 466,000 consumers out of 35.5 million nationwide electricity users.
“If a net-metering consumer earns a 50% return on his investment because of the savings he gets as a meter user, while IPPs [independent power producers] get 17% and bank deposits earn 8%, isn’t a 50% return a good rate,” he asked.
“I generate electricity at Rs. 5 and send it to the grid at Rs. 27,” he continued. “The average price at which we buy electricity from the rest of the grid is Rs. 8.31. Is buying at Rs. 27 justified?”
Leghari said under the revised framework, returns for net-meter users would fall to around 37%, adding that even at that level, rooftop solar power generation remains financially attractive.
He said the changes were aimed at ensuring “fair pricing” and reducing cross-subsidies borne by the broader consumer base.
“Besides them, there are 35.5 million other consumers who do not even use net-metering,” he said, adding that if electricity costs for the wider public fell by up to Rs. 1.50 per unit, the adjustment would be justified.
Leghari's statement follows the prime minister's instructions to file a review in response to the new NEPRA rules, as he directed his administration to protect existing consumer contracts while ensuring the policy does not shift the financial burden onto non-solar electricity users.
