ISLAMABAD: Pakistan’s Energy Minister Sardar Awaiz Leghari has sought US assistance in securing international financing at “more favorable rates” to fix deficiencies in the South Asian nation’s ailing power sector, a statement from his office said on Thursday.
Restoring the viability of the energy sector is a major demand of the IMF, with which Pakistan is in negotiations for a new bailout loan ranging from $6 billion to $8 billion to avert default in an economy growing at the region’s slowest pace.
The IMF wants Pakistan to prevent further accumulation of circular debt in its power sector arising from subsidies and unpaid bills, and implement reforms to reduce costs by improving electricity transmission and distribution, moving captive power into the grid, improving governance, and combating theft.
Additionally, Pakistan needs to maintain power and gas tariffs at levels that ensure cost recovery, with adjustments made to safeguard the financially vulnerable, through existing progressive tariff structures.
In a report released in January, the IMF said Pakistan had missed its target for power sector arrears, largely due to lower-than-expected recoveries and tariffs.
On Thursday, a delegation from the US treasury department called on the Pakistani power minister and discussed collaborations in the energy sector as well as Islamabad’s reform agenda.
A statement from Leghari’s office said he told the delegation about “the importance of US support in securing international financing at more favorable rates for Pakistan’s power sector.”
“He expressed the need for US technical assistance to address the gap between seasonal production and demand,” the statement added.
Leghari informed the US delegation about plans to address the power sector’s deficiencies, adding that the reforms were aimed at improving Pakistan’s energy mix and rectifying other issues.
The energy minister also informed the US delegation about reforms to increase private sector participation in the distribution and transmission of electricity. T
Discussing debt management, the energy minister also apprised the US team of a “fan replacement program” being launched by Pakistan in a bid to increase energy saving.
“The US Assistant Secretary of Treasury [Brent Neiman] appreciated Pakistan’s power sector reform initiatives and assured all possible cooperation to resolve Pakistan’s power sector problems,” the statement said.
