Finance Minister Miftah Ismail said on Wednesday the application of fuel cost adjustment (FCA) on electricity bills had been deferred, not waived, on the orders of the prime minister, but promised that electricity rates and inflation would start declining after a month.
He was speaking at a joint news conference with Defence Minister Khawaja Muhammad Asif, who said the finance minister would be elected as a senator before the expiry of his six-month term on Oct 16 in recognition of his hard work and tireless efforts to bring back the country from the brink of default and put up a strong defence against criticism.
As per law, a person can be made a minister for six months and has to get elected as a senator or an MNA after that time.
He hinted at Ismail’s election on a seat to be vacated by one of the senators whose terms are due for expiry in about 18 months, i.e. March 2024. He said the prime minister, the PML-N and cabinet members had expressed confidence in his performance and “this confidence is well placed and well deserved”.
Ismail told reporters power tariffs would decline in October, and so would the FCAs and quarterly tariff adjustments (QTAs). “This hardship will have to be borne for another month,” he said, adding that diesel and petrol prices would depend on the global oil market.
When asked to clarify if the premier’s announcement on withdrawing FCA for households using up to 300 units meant suspension for recovery later or complete waiver, and what would be its financial impact, the finance minister said the FCA had been deferred.
Earlier, the government also decided to stagger in three months the application of a Rs9.90 per unit FCA on consumers using up to 200 units per month.
The minister said onion and tomato prices had also dropped closer to Rs100 per kg after the government’s intervention from over Rs300 per kg in the wake of floods that destroyed crops in Sindh and Balochistan. He said these natural events were outside one’s control but would require additional funds and being arranged mostly from within own resources.
Asked if the government would seek emergency financial support from the International Monetary Fund (IMF) to cope with flood-related destruction, Ismail said he was in contact with the Fund but the emergency was not an immediate target until disaster need assessment was completed in consultation with the World Bank and other organisations for rehabilitating flood-hit people. He said many estimates had put flood damage at $10bn to $12bn.
MEETING WITH IMF: The finance minister later held a video conference with the IMF mission chief and discussed the latest macroeconomic indicators, including flood-related losses.
The two sides also discussed the schedule for the next review meetings in October for end-September performance that would justify the disbursement of another tranche of about $1.2bn later next month, Ismail told Dawn.
Responding to another question on the import of edible items and cotton from India to make up for crop losses in floods and counter inflation, the finance minister said onion and tomato imports from Afghanistan and China had been arranged and some export associations had also sought cotton imports from India, but it could be considered if other sources were not available.
He, however, assured that textile exporters’ needs would be fully met to help them deliver on their export orders.
He said the adverse lag impact of the “unwise policies” of the PTI government had led to historically high prices, as the previous government failed to arrange oil, gas or coal in advance. He said even the last month’s FCAs were because of the expensive electricity produced in May based on expensive fuel arrangements made by the previous government in March-April.
He said former prime minister Imran Khan did not honour the commitments his government made with the IMF, especially related to subsidies on electricity, gas and petroleum products.
He said that despite promising the IMF that the previous government would not give amnesty to businessmen and withdraw power, petroleum and gas subsidies, Mr Khan increased these subsidies and gave tax amnesty to “his cronies and ATMs [people allegedly bankrolling the PTI chief]” while the economy was already overheating.
Miftah Ismail said the previous government did not work on renewable energy, including solar power. “Had [Mr Khan] worked on the installation of solar energy, the power rates would have been much lower,” he said, adding that electricity rates would become unaffordable if the government chooses to end load-shedding, as some furnace oil-based plants like Jamshoro would cost Rs60 per unit.
He said the shortage of some commodities, especially tomatoes and onions, due to flooding led to an increase in their prices but now they were coming down.