KARACHI: A group of prominent businessmen this week urged the government to review contracts with independent power producers, in the wake of a crisis over record electricity prices that has fueled nationwide protests and traders strikes since last month.
IPPs are private, non-utility generator companies that produce electricity and sell it to the government and end users. Among major criticisms of IPP contracts is that they require the government to make capacity payments even when power generated by them is not fully utilized. Experts say the arrangement leads to a high cost of electricity which augments the production costs of factories and industrial units. IPPs have also been accused of making exorbitant profits and dividends on capital invested under existing contracts.
Speaking to reporters earlier this week, Caretaker Prime Minister Anwaar-ul-Haq Kakar acknowledged problems with IPP contracts when questioned about record electricity bills that have led to nationwide protests. He said the government was “thoroughly discussing” renegotiating the contracts among the various options it was considering in response to the unrest.
“We request the government not to revise the agreements with the IPPs on old terms,” Mirza Akhtar Baig of the United Business Group said at a news conference in Karachi on Wednesday. “We should not renew contracts with them on old terms.”
Baig said under the contracts, the government had been paying capacity surcharges to IPP companies, which he said even exceeded the country’s defense budget.
Representatives from the Power Division told Senate last week capacity payments to IPPs for the current fiscal year had reached a staggering Rs1.3 trillion. Over the years, IPPs have also been accused of over invoicing and misreporting, and experts and politicians have called for a heat rate audit.
At Wednesday’s press conference, the business group also requested the government to put the names of all domestic and foreign IPPs owners on the exit control list to probe irregularities in the power generation sector.
“At present, Pakistani industries are facing problems due to our declining national economy,” Khalid Tawab, another influential businessman at the press conference, said. “Traders and industrialists are all worried because of the electricity bills. Forty percent of industries have been closed in Pakistan.”
Kakar’s government has also announced it is trying to bring down electricity tariffs, and blamed electricity theft for the revenue shortfall of Rs589 billion ($1.9 billion) in the power sector annually.
Interim energy minister, Muhammad Ali, said this week the government was setting up a task force to crackdown against those stealing electricity or not paying bills on time.
An electricity price hike was agreed with the IMF earlier this year when the international lender approved a short-term $3 billion bailout package for Pakistan.
Pakistani businesses demand new contracts with independent power producers amid electricity bills crisis
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Pakistani businesses demand new contracts with independent power producers amid electricity bills crisis
- PM Kakar this week acknowledged problems with IPP contracts, said “thoroughly discussing” renegotiating
- Pakistan has been in the grips of sporadic protests and strikes since last month over record electricity bills
52 killed in bombing in southwest Pakistan near gathering to mark Prophet’s birthday
- Hospital officials say 100 people injured, death toll could increase as many in critical care
- Two killed as bomb rips through mosque in northwestern Pakistan during Friday prayers
QUETTA/PESHAWAR: At least 52 people, including a senior police official, were killed on Friday when a suicide bomber hit close to a gathering to mark the Prophet’s birthday in southwest Pakistan, a district commissioner and hospital officials said.
The attack, in which 100 people were injured, took place in Mastung city in the impoverished Balochistan province.
“Locals were gathering for an Eid Milad ul Nabi procession when a suicide bomber attacked a police van near the rally,” Mastung Assistant Commissioner Mastung Atta ul Munim told Arab News, adding that a deputy superintendent of police was among the dead.
Dr. Saeed Baloch at the Nawab Ghos Buksh Raisani Hospital said 52 had been killed and 100 were injured.
“Thirty-two dead bodies have arrived at our hospital [NGBR] and 20 were shifted to District Headquarters Hospital Mastung,” the doctor said. “The number of critical injuries is high and the death toll might increase.”
No group has as yet claimed responsibility for the attack but the Tehreek-e-Taliban Pakistan (TTP) denied it was involved.
The Daesh group is known for attacks in Pakistan and beyond on religious gatherings and on minorities.
Balochistan is also home to a decades-long insurgency by ethnic Baloch guerrillas fighting the government over accusations of exploiting the province’s rich gas and mineral resources.
HANGU ATTACK
Separately, at least two people were killed and ten injured as an explosion ripped through a mosque located in a police station in Hangu in the northwestern Khyber Pakthunkhwa province.
“Two people have died and over 10 are injured,” a spokesperson for Rescue 1122 Hangu, Harron Khan, told Arab News.
The roof of the mosque had collapsed, police said, and many people were trapped inside.
The blast occurred during Friday prayers, as a mosque leader was delivering his sermon before a group of around 50 people.
Four Pakistani soldiers killed blocking TTP militants infiltrating from Afghanistan — army
- Pakistan says TTP has become emboldened since Afghan Taliban seized power in Afghanistan in August 2021
- The Afghan government says it does not permit its soil to be used by armed groups against other nations
ISLAMABAD: Four Pakistani soldiers were killed on Thursday in an operation to stop militants belonging to the Pakistan Taliban from infiltrating from Afghanistan, the military said on Friday.
Pakistan says the Pakistani Taliban, or TTP, have become emboldened since the Afghan Taliban seized power in Afghanistan in August 2021 as US and NATO troops were in the final stages of their pullout from the country after 20 years of war. Authorities say the insurgents, who are allied but separate from the Afghan Taliban, have found sanctuaries and have even been living openly in Afghanistan since the Taliban takeover.
“On 28 September 2023, at 1745 hours, own security forces thwarted an attempt of TTP terrorists to infiltrate from Afghanistan into Pakistan near Sambaza in Dist Zhob close to Pak-Afghan border,” the Pakistan army said in a statement.
“In the ensuing operation, Havildar Sattar, Lance Naik Sher Azam, Lance Naik Adnan and Sepoy Nadeem fought valiantly and embraced shahadat [martyrdom].”
The army said three militants were also killed in the operation.
The TTP has stepped up its attacks on Pakistan since November last year when it unilaterally called off a tenuous peace deal that had been brokered by Kabul.
The Afghan government says it does not permit its soil to be used by armed groups against other nations.
‘Place the burden’ on wealthy segments of society, IMF tells Pakistan
- Pakistan and IMF struck $3 billion bailout deal earlier this year
- Reforms linked to bailout have already fueled annual inflation
KARACHI: Pakistan needs to “place the burden” on wealthy segments of society and ensure that the rich pay taxes and the poor are protected, an IMF spokeswoman said in a press briefing on Thursday.
The International Monetary Fund and Pakistan struck a staff-level agreement for the provision on $3 billion in bailout funds under a stand-by arrangement (SBA) earlier this year, giving the South Asian economy a much-awaited respite as it teetered on the brink of default.
Reforms linked to the bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fueled annual inflation, which rose to a record 38.0 percent in May. Interest rates have also risen, and the rupee hit all-time lows. Last month the currency fell 6.2 percent though it has sharply recovered in September amid a crackdown on illegal foreign exchange trade in grey and black markets by security agencies.
The August data from Pakistan’s statistics bureau showed a slight easing from July’s 28.3 percent inflation rate, but food inflation remained elevated at 38.5 percent.
“Place the burden on the wealthy segments of society. It’s important … that the rich pay their taxes, tax to GDP ratio in Pakistan is very, very low and that the poor are protected in society. The poor and the vulnerable members of society are protected,” IMF spokeswoman Julie Kozack told reporters in Washington, when asked about IMF reforms linked to the bailout.
She said the objectives of the program were to “provide a policy anchor” to Pakistan to address domestic and external imbalances and a framework for financial support from other donors, multilateral and bilateral partners, including fresh financing and rollovers of debt coming due.
“Policy efforts center on the implementation of the fiscal year 2024 budget, appropriate monetary policy aimed at bringing inflation down, and continued reforms to improve the viability of the energy sector,” Kozack said.
“All of these reforms are ultimately aimed at paving the way for higher, more inclusive and more resilient growth. To support social development and climate resilience, the program envisages plans to strengthen public financial management, tax administration efforts, and to better prioritize public investment. And all of this is being done with support from partners including not only the IMF but also the World Bank and the Asian Development Bank.”
FX clampdown boosts Pakistani rupee 6.1 percent to become September’s top currency
- September’s gains have almost made up for all of the rupee’s losses in August
- Gains technically make rupee the best-performing currency in the world this month
KARACHI: Pakistan’s rupee has gained 6.1 percent against the dollar so far in September, following an official clampdown on illegal foreign exchange trade in grey and black markets by security agencies.
September’s gains have almost made up for all of the rupee’s losses in August and technically make it the best-performing currency in the world this month. The rupee hit a record low of 307.1 against the dollar on Sept. 5 but has made a sharp recovery since the country’s financial regulator and security agencies began taking action the next day to curb black market operations.
The Pakistani rupee closed 0.3 percent up in the interbank market at 287.8 per dollar on Thursday.
The crackdown on black market operators against the informal market resulted in tens of millions of dollars pouring back into Pakistan’s interbank and open markets, dealers said.
“The government’s stern administrative action against the unlawful foreign exchange dealers and hoarders in commodity markets is stabilizing the exchange rate, providing a respite to the imported inflation and easing out commodity prices,” the Finance Ministry said in its monthly report.
“The rupee has indeed performed well but this data does not reflect the sharp depreciation preceding this performance. Pakistan’s currency has been one of the worst-performing in recent years,” said Fahad Rauf, Head of Research at Ismail Iqbal Securities.
A market-determined exchange rate is a key condition for Pakistan receiving a $3 billion bailout loan from the International Monetary Fund (IMF) that was agreed in July to help avert a sovereign default.
Rauf added that the recent performance of the rupee is more of a recovery than an actual out-performance. He said the reserves situation is still far from comfortable.
On Thursday, Pakistan’s reserves clocked in at $7.637 billion, enough for less than two months’ worth of imports.
The report added that inflation is anticipated to remain high in the coming month, hovering around 29-31 percent due to an upward adjustment in energy tariffs and a major increase in fuel prices.
Palestinians' right to self-determination same as Kashmiris — foreign minister
- Statement comes amid US-sponsored efforts to normalize Israeli relations with Muslim states
- Pakistan does not recognize Israel and has repeatedly called for an independent Palestinian state
ISLAMABAD: Pakistani foreign minister Jalil Abbas Jilani said on Thursday Pakistan’s position on Palestine had not changed, amid US-sponsored efforts to normalize Israeli relations with Muslim states, including Saudi Arabia.
Israel has moved closer to the United Arab Emirates, Bahrain, Sudan and Morocco following a US-driven diplomatic initiative in 2020 which pushed for normalization of relations. Expectations that Israel might normalize relations with Saudi Arabia, the home of Islam’s two holiest shrines, were ratcheted up last week after the Saudi crown prince said in an interview the two countries were moving steadily closer to normalizing ties.
Pakistan does not recognize the state of Israel and has repeatedly called for an independent Palestinian state based on “internationally agreed parameters” and the pre-1967 borders with Al-Quds Al-Sharif as its capital.
“The position of Pakistan on Israel and Palestine was the same yesterday and is the same today, and it will always be the same in the future as well,” the Pakistani foreign minister told reporters.
“Our policy is linked to the rights of Palestinian people,” Jilani added.
“The issue of Palestine’s right to self-determination is the same as Kashmiris and if we say that it is the same for the Palestinians and Kashmiris then it becomes part of our national interest to support both.”
