News
Wednesday, May 29, 2013
New govt plans $5bn debt issue to switch lights onISLAMABAD: The new government plans to sell $5 billion in treasury bills to pay off a chain of debt choking the country’s power sector and its economy and boost electricity output by a quarter –all within its first 100 days in power.
The incoming administration of prime minister-elect Nawaz Sharif has identified widespread blackouts that last up to 20 hours a day in some areas as its top political and economic challenge. The deepening power shortages have sparked violent protests and cost hundreds of thousands of jobs in a country already beset by high unemployment, a failing economy, widespread poverty, sectarian bloodshed and a Taliban insurgency.
Several key members of the incoming government’s energy team interviewed by Reuters over the past few days said that out of a long list of challenges ranging from lack of investment to electricity theft, plugging a 500 billion rupee ($5.08 billion) financing hole was the most pressing task. Sources in the new administration said these funds would be raised through sales of 3-month, 6-month and 12-month treasury bills.
By breaking a vicious cycle of withheld payments running through the entire power-generation chain from end consumers to electricity distributors, power plants to refiners who can’t import enough oil because of unpaid fuel bills, the team hopes to bring immediate relief. “In the first three months of our government, we plan to add 2,000-3,000 megawatts to the national grid and at least 16,000 megawatts in the medium term,” said Khawaja Asif, who is due to take the energy portfolio in Nawaz’s cabinet that will be sworn in on June 5.
Pakistan’s power sector now generates about 8,000 MW, with needs estimated at 15,000. A “100-day roadmap” for the energy sector, due to be unveiled by Nawaz on June 5, and made available to Reuters, also calls for an overhaul of a decades-old system of subsidies that is considered one of the root causes of the crisis. “It makes no sense that you subsidise electricity at the same rate for the person who drives a Mercedes and the poor guy who rides a bicycle to work,” said Asif, who briefly served as minister for petroleum and natural resources in 2008.
“People who can pay more for power will pay more. That will be the hallmark of our government’s energy policy.” That, alongside a promised push to tackle electricity theft and a growing mountain of unpaid electricity bills, can set the new government on a collision course with the country’s rich and influential elite. reuters
Courtesy www.dailytimes.com.pk