ISLAMABAD: Minister for Planning Ahsan Iqbal on Monday defended the Chinese power plants for charging hefty capacity repayments, arguing that Beijing had invested to generate 8000 megawatts when no one was ready to invest even a penny in Pakistan’s power sector.
He said now there was no justification to ask China to amend the sovereign agreements because there was a surplus of electricity available but unable to be utilized. “In such circumstances, no one will trust our sovereign agreements and investors will start incorporating 20 to 30 as the country’s risk premium, keeping in view such precedent,” Ahsan said while launching the Monthly Development Update here at P Block on Monday.
To a query regarding around Rs1 trillion capacity repayment being charged by Chinese power plants installed under much hyped China Pakistan Economic Corridor (CPEC) out of the total payment of Rs1.9 trillion on an annual basis, the minister defended the sovereign agreements struck with China when nobody was interested to invest a penny at a time of load-shedding occurred every hour. He said then the country was handed over to an incompetent player, and demand for the power sector was disrupted because the growth momentum was lost. “Now, how could we justify asking China to amend the sovereign agreements, as we have a surplus power?” He questioned.
The minister said the PTI leader propagated a narrative that everything was bad in the country, and the international community started labelling Pakistanis as a corrupt nation, but actually, there was a wide gap between perception and reality. When asked about the NAB chairman’s report about handing over a report to PM Shehbaz Sharif disclosing Rs6 trillion recovery in their drive against corrupt practices, the minister said Pakistan was not a corruption-free country, but Pakistanis were normal people, and they were as corrupt as any other nation. He said the perception about corruption was inflated in the case of Pakistan and raised a question whether Pakistanis were more thieves than Indians. He said there was no truth in it.
He said the ministries/divisions asked for additional funding of Rs500 billion over and above the allocated amount for the Public Sector Development Program (PSDP) for the current fiscal year, which, if not provided, would result in cost escalation required for completion of ongoing projects. He said that against the requirement of Rs200 billion, the government allocated Rs 20 billion for the Bhasha Dam. For the water sector, the funds allocation was insufficient.
The minister warned that the decreased funding for development would result in creating another monster of Circular Debt (CD), just on the pattern of the energy sector (power and gas), as the development to GDP ratio must go up to 2.5 to 2.7 per cent of GDP in the coming years to avoid piling up of another liability for the future.
For the current fiscal year, there was an authorization of Rs555.5 billion in the first seven months of the current fiscal year, out of which the Ministry of Finance sanctioned Rs338 billion. However, the utilization of PSDP funds stood at Rs272.8 billion in the first seven months compared to Rs220 billion in the same period of the last fiscal year, registering an increase of 27 per cent. However, the question arises about the effective utilization of PSDP funds when a major chunk of resources is going to be utilized in the last fourth quarter (April-June) of CFY26.
