Working in silos will not do
With the power sector's push, backed by the IMF, captive power plants are being subjected to hefty levies on gas consumption. The objective is to transition industrial consumers to the grid, which is being partially achieved. The logical consequence should have been a higher off-take of RLNG by the power sector, but that is not happening, leaving expensive gas unused, which contributes to the circular debt of gas, excessive pressure on the pipelines, and lower off-take of cheap domestic gas.
Reportedly, when the Petroleum Division urged the Power Division to increase its intake of RLNG, the minister replied that it would not commit a grave sin (gunnah-e-kabeera) by violating the economic merit order (EMO). The minister was behaving like a principled man, but such discipline was regrettably found lacking when the levy imposed (at peak rates for the entire day) was even higher than what the IMF had prescribed.
The Discos (working under the Power Division) are being blamed for Rs 240 billion of overbilling to poor consumers, who are already paying for the inefficiencies of the government. The minister is silent on this issue that is beginning to become increasingly conspicuous.
This selective amnesia does not stop here. The power minister is pushing his petroleum counterpart to review RLNG buying contracts with Qatar, asking to emulate what the Power Division has done with the IPPs.
How naïve is it to even suggest this remedy. First, it would be tantamount to openly disregarding the sanctity of sovereign contracts. Second, it tends to advocate and normalise coercive actions that were employed against local IPP owners, a stance that has severely undermined investor confidence. Third, it demands breaking contractual commitments with international investors, despite the Power Division and ETF's own failures — even they could not persuade Chinese IPPs to waive the late payment interest (LPI) on outstanding dues, casting uncertainty over the Rs 1.3 trillion circular debt reduction plan.
And the cherry on the top is that EMO that is being termed 'holy' while others are being advised to violate (or revise) sovereign contracts. Not only is buying RLNG from Qatar a necessity, but running RLNG plants to a specific limit is also necessary.
It is a problem of double standards and a lack of understanding of the core issues. What the government is required to focus on is why the power demand is falling, as the off-take from the grid is still 11 percent shy of its peak in FY22. The need is to address the issue of solar net metering — where rates should be revised by adjusting solar pricing for new net metering contracts (with no change in existing rates) — has been identified, yet the necessary action has not been taken.
The power ministry fears a public backlash over solar net metering, while the public is being cheated by entities under its domain by engaging in overbilling at the same time. Suffice it to say that the direly needed clarity of thought and objectivity in the solutions being proposed are simply missing.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
3 minutes ago
- Express Tribune
Pakistan — between Beijing and Washington
The writer is a retired major general and has an interest in International Relations and Political Sociology. He can be reached at tayyarinam@ and tweets @20_Inam Listen to article Something unexpected happened after Indian Operation Sindoor and Pakistan's agile response through Operation Bunyan Marsus. The four-day skirmish left India red-faced despite its massive media onslaught, projecting the outcome as victory. President Trump took credit for the ceasefire, duly acknowledged by Pakistan, while an egotistic India still refuses to accept foreign interlocution. Then, on August 1, 2025, President Trump slapped a punitive 25% tariffs on India, letting Pakistan off with a relatively benign 19%. Earlier Trump had feted out Field Marshal Asim in the White House. He announced a massive trade deal with Pakistan on July 30. Cumulatively, the cited developments bring Pakistan back into relevance, and business with the West Plus, re-hyphenate it with India, debunk the massive Indian propaganda to paint Pakistan as 'Terroristan', and open new vistas for Islamabad. However, this closeness with the US again, to some analysts, is at the cost of Pak-China friendship. First Islamabad and Beijing. Two statements on August 1 — one from Foreign Office and the other from ISPR — clearly articulated the special nature of Pak-China friendship in context. Foreign Office spokesperson emphatically highlighted the decades-old strategic partnership with Beijing, notwithstanding Islamabad's relations with other countries. And perhaps for the first time, GHQ celebrated the 98th founding anniversary of China's People's Liberation Army on August 1 with a dignified ceremony attended by high-ranking Chinese officials. Chinese Ambassador Jiang Zaidong was the chief guest. The Middle Kingdom conducts its foreign relations in a very matured, measured and deliberate manner. One remembers being part of a delegation led by the Chairman Joint Chief of Staff Committee, wherein bilateral exercise between both air forces was being discussed. When Pakistan had to remove the US-supplied F-16s from the planned manoeuvres at some later hours, the Chinese Defence Minister, Mr Lee Quang Li was extremely conciliatory to address the embarrassment. Chinese relations do not come with geo-strategic caveats. They ostensibly believe in 'harmony' and are sensitive to other nations' imperatives and compulsions. So, any closeness with the US is not, will not and should not come at the cost of Pak-China bilateralism, brotherhood and benevolence. Second, the conduct of the Pak-US relations. Since partnership against communism in the US-led SEATO, CENTO, GWOT, Islamabad has traditionally remained closer to the US, providing back-channel support to the 1971 Sino-US détente. Pakistan's military benefited particularly from the US hardware, doctrine and training. Our cantonments in Kharian, Multan and Gujranwala got infrastructure support from Washington. However, from geo-strategic partnership, Pakistan was later relegated to relative obscurity by Trump 1.0 and Biden Administrations, thanks partly to the pervasive Indian influence traditionally on the US policy apparatus. Trump 2.0 is more transactional, upending the traditional US geo-strategic construct and hence the punitive tariffs on India, and favour with Pakistan. Pakistan has, reportedly, the fourth largest hydrocarbon reserves along its coast. It must have been the size of these reserves that sparked President Trump's comment on X/Truth Social — "We are in the process of choosing the oil company that will lead this Partnership. Who knows, maybe they'll [Pakistan] be selling Oil to India one day." This is an unsettling discovery for Pakistan/region and good business for the US energy giant ExxonMobil that 'might' bid for and undertake offshore drilling. Any US company doing exploration would automatically ensure security of the operation. The growing Pak-US counterterrorism cooperation and mutual alignment over Afghanistan are also likely to cement bilateral ties, with China benefitting from a secure regional environment. Under the last PTI government, ExxonMobil, then undertaking offshore exploration, was not allowed access to an additional area in Kekra field. Pakistan 'expects' ExxonMobil to come back as negotiations move forward. More recently, Pakistan also inked an agreement to import US crude with first shipment expected in October. While earlier, Washington had refused to export LNG to Pakistan, given joint ventures between the US and Indian companies, implying Islamabad to go through New Delhi. Today the US Exim Bank is interested in providing capital to the stalled Reko Diq copper and gold mining project. American companies are mulling joint ventures with Pakistani firms to tap Pakistan's mineral sector, with an estimated potential of $ 8trillion. And GB, KP and Balochistan have substantial deposits of rare earths. Additionally, Pakistan's bitcoin policy also interests Trump personally. All this fits his economic outlook. Third, Pakistan's delicate diplomatic balancing. In a meeting with the Afghan acting Ambassador in Islamabad last year, Ambassador Sardar Ahmed Shakeeb mentioned that IEA leadership was very impressed with the way Pakistan handled its relations with America. As per an Indian analyst, Biswanath Bhattacharya, Islamabad has perfected 'balancing contradictions so deftly that even gravity seems to look on in admiration'. Despite being tethered economically and strategically to China, Islamabad is able to carve an advantage from a transactional, mercurial and unpredictable Trump White House, under the overall environment of Sino-US hostility. From being a vanguard nation in the Chinese BRI through CPEC, Pakistan not only secured a deal for American oil investment, but it also earned public endorsement from President Trump. In the last fiscal year, Pakistan's exports to the US stood at $6 billion, against $2.4 billion worth of imports. The ensuing surplus of $3.7 billion was worrying for President Trump. However, Pakistan under the new 19% tariff is still at relative advantage, compared to India's 25%, Bangladesh's 20%, Iraq's 35%, Vietnam's 20% and 19% for Malaysia, Thailand and Indonesia. Pakistan, in trade negotiations, secured duty-free access to over 4,100 American products. Avoiding bloc politics, Pakistan's diplomatic work endears it today to the world powers — China, the US and Russia — increasingly through its geo-strategic relevance, and gutsy and matured dealings with a bellicose and arrogant India. Islamabad's foreign service understands that 'survival and prosperity depend on cultivating relationships with all major players'. It has been able to balance the dictates of BRI/CPEC through increasing cooperation with the US on Afghanistan, counterterrorism, and now, potentially on minerals, oil and gas. The oil deal marks a watershed in exploiting Pakistan's untapped hydrocarbons with American money and technology. These "fourth largest" reserves would catapult Pakistan from energy import to export, rewriting the region's geo-economics. Mr Bhattacharya admires "Pakistan's astonishing ability to dance on the diplomatic tightrope — undaunted, unbowed, and, for now, undefeated".
Business Recorder
4 hours ago
- Business Recorder
Pakistan eyes castor cultivation as high-value export crop
Pakistan is exploring the large-scale cultivation of castor as part of efforts to diversify crops, boost exports, and improve farmer incomes, Federal Minister for National Food Security and Research Rana Tanveer Hussain said on Wednesday. Chairing a high-level meeting with the International Multi Group of Companies, led by Chairman Amjad Rashid, the minister said castor was a low-input, high-yield crop well suited for the country's arid and semi-arid regions, the Ministry of National Food Security said in a statement. 'Castor can be grown in barren areas where traditional crops struggle, making it ideal for land optimisation and income generation for farmers,' Hussain said, adding that the crop currently fetches Rs7,000 per 40kg in the local market, higher than most conventional crops. H1CY25 agro exports decline by $1bn YoY, says PKI president The Chinese not-for-profit partner in the project has offered to provide high-quality hybrid seed, potentially doubling yields from 50 to 100 maunds per acre. The visiting company also expressed willingness to sign formal agreements with local farmers, committing to purchase all harvested castor at pre-agreed terms. The ministry will support the initiative through awareness campaigns and seed distribution in collaboration with provincial agriculture departments. Hussain said Pakistan could emerge as a competitive supplier in the global castor oil market, which has strong demand in the pharmaceutical, cosmetics, lubricant, and biofuel sectors. The meeting concluded with an agreement to launch pilot projects, finalise farmer contracts, and develop a sustainable, export-oriented castor value chain in the country.
Business Recorder
7 hours ago
- Business Recorder
India's Modi to visit China for first time in 7 years as tensions with US rise
NEW DELHI: Indian Prime Minister Narendra Modi will visit China for the first time in over seven years, a government source said on Wednesday, in a further sign of a diplomatic thaw with Beijing as tensions with the United States rise. Modi will go to China for a summit of the multilateral Shanghai Cooperation Organisation that begins on Aug. 31, the government source, with direct knowledge of the matter, told Reuters. India's foreign ministry did not immediately respond to a request for comment. His trip will come at a time when India's relationship with the U.S. faces its most serious crisis in years after President Donald Trump imposed the highest tariffs among Asian peers on goods imported from India, and has threatened an unspecified further penalty for New Delhi's purchases of Russian oil. Modi's visit to the Chinese city of Tianjin for the summit of the SCO, a Eurasian political and security grouping that includes Russia, will be his first since June 2018. Subsequently, Sino-Indian ties deteriorated sharply after a military clash along their disputed Himalayan border in 2020. Modi and Chinese President Xi Jinping held talks on the sidelines of a BRICS summit in Russia in October that led to a thaw. The giant Asian neighbours are now slowly defusing tensions that have hampered business relations and travel between the two countries. India braces for hit to $64bn US exports amid rising tensions with Washington Trump has threatened to charge an additional 10% tariff on imports from members - which include India - of the BRICS group of major emerging economies for 'aligning themselves with Anti-American policies.' Trump said on Wednesday his administration would decide on the penalty for buying Russian oil after the outcome of U.S. efforts to seek a last-minute breakthrough that would bring about a ceasefire in the war in Ukraine. Trump's top diplomatic envoy Steve Witkoff is in Moscow, two days before the expiry of a deadline the president set for Russia to agree to peace in Ukraine or face new sanctions. Meanwhile, India's National Security Adviser Ajit Doval is in Russia on a scheduled visit and is expected to discuss India's purchases of Russian oil in the wake of Trump's pressure on India to stop buying Russian crude, according to another government source, who also did not want to be named. Doval is likely to address India's defence cooperation with Russia, including obtaining faster access to pending exports to India of Moscow's S400 air defence system, and a possible visit by President Vladimir Putin to India. Doval's trip will be followed by Foreign Minister Subrahmanyam Jaishankar in the weeks to come. India, China agree to expedite resumption of direct flights as ties improve Export impact U.S. and Indian officials told Reuters a mix of political misjudgement, missed signals and bitterness scuttled trade deal negotiations between the world's biggest and fifth-largest economies, whose bilateral trade is worth over $190 billion. India expects Trump's crackdown could cost it a competitive advantage in about $64 billion worth of goods sent to the U.S. that account for 80% of its total exports, four separate sources told Reuters, citing an internal government assessment. However, the relatively low share of exports in India's $4 trillion economy is expected to limit the direct impact on economic growth. On Wednesday, the Reserve Bank of India left its GDP growth forecast for the current April-March financial year unchanged at6.5% and held rates steady despite the tariff uncertainties. India's government assessment report has assumed a 10% penalty for buying Russian oil, which would take the total U.S. tariff to 35%, the sources said. India's trade ministry did not immediately respond to a request for comment. The internal assessment report is the government's initial estimate and will change as the quantum of tariffs imposed by Trump becomes clear, all four sources said. India exported goods estimated at around $81 billion in 2024 to the U.S.
