ISLAMABAD: Finance Minister Shaukat Tarin said on Monday that electricity tariff would go up by 18 per cent in two phases next year — 12 per cent in January and six per cent in April — under an IMF programme, even though the government would provide a subsidy of Rs55 billion from the budget.
Addressing a news conference, the minister said the government had agreed to increase the tariff by six per cent in October, but the actual increase was 4.4 per cent because of government’s decision to exempt lifeline consumers. He said the tariff hike would be in addition to any financial impact arising out of an increase in oil prices which was a ‘pass through’ item in electricity rates.
Mr Tarin confirmed that there were differences among the provinces over horizontal distribution of resources under the National Finance Commission, but said the federal government would play the role of ‘honest broker’ to resolve the differences and evolve a consensus on the sharing of net proceeds of the federal divisible pool.
He said it had already been agreed that population would not be the sole criterion for distribution of resources and the next NFC meeting in Karachi later this week would focus on the vertical and horizontal distribution of resources.
In reply to a question about NWFP’s decision to boycott the next NFC meeting, Mr Tarin said he had discussed the matter with the NWFP chief minister and finance minister on Monday. He said the prime minister had recently announced that Rs10 billion would be released to the province as the first instalment of net hydel profit. An agreement on the timeline for the remaining Rs100 billion to be released in four instalments was being worked out while the issue of mark-up on net hydel profit after 2004-05 would be resolved by a committee, he added.
About talks held recently with the International Monetary Fund in Dubai, Mr Tarin said Pakistan had agreed to increase the revenue collection target to Rs1,396 billion from Rs1,380 billion set in the budget because of higher than expected security expenditure. This, he said, could be achieved by increasing excise or customs duty by 1.5 per cent, but a decision would be taken in January after analysing tax collection results.
Besides, some cuts in expenditure would have to be made through austerity measures expected to be approved on Wednesday, he said, adding that every effort would be made to minimise cuts on development expenditure.
Mr Tarin said that despite two per cent less than targeted tax collection so far, the government would increase it by 1.8 per cent of GDP and achieve the fiscal deficit target of 4.9 per cent of GDP for the current fiscal year.
He said that on the basis of Dubai talks the IMF mission would submit a report on Pakistan’s economic performance to its executive board in December and the country was expected to receive about $1.2 billion next month.
Answering a question, the finance minister said the government was planning to launch foreign currency bonds of $500 million between January and June and would decide how much of that amount should be raised through Sukuk or Eurobond.
Mr Tarin said there were people in and outside the government who wanted the Competition Commission of Pakistan to be ‘toothless’ because of its campaign against cartelisation and anti-consumer activities of some market forces. He said the law must not be allowed to lapse on Nov 28 at any cost, although it had been sent back to the parliamentary committee to evolve consensus.
Mr Tarin said the government would soon introduce the corporate rehabilitation act in parliament to put in place a system of restructuring sick industrial units in the private sector, evaluation of their assets and non-performing loans so that national assets were transferred to better management, instead of destroying them without any contribution to the economy.
For this purpose, he said, specialised benches would be set up in all high courts which would be assisted by technical committees to decide whether a sick company could be revived or liquidated and at what terms and conditions the new management should take over and make them profitable.
source:
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/pakistan/13+power+tariff+to+rise+in+january+tarin-za-06
