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Express Tribune
6 days ago
- Business
- Express Tribune
Govt poised to do away with cross-subsidies for gas
Listen to article The government is set to end cross-subsidy for domestic gas consumers and introduce a direct budgeted subsidy model by 2026, in line with the mechanism established for the Power Division. The federal government is locked in negotiations with the International Monetary Fund (IMF) under the Resilience and Sustainability Facility to replace cross-subsidies with direct subsidies commensurate with the consumer income levels under the Benazir Income Support Programme. In a recent meeting, the Petroleum Division informed the cabinet that they were engaged with the IMF and the new system was likely to be developed by 2026. It said that it had already hired advisory firm KPMG and a dedicated group had been formed to examine the replacement of cross-subsidies as part of efforts to revitalise the gas sector. It was revealed that residential consumers were benefitting from a cross-subsidy of over Rs150 billion, financed by imposing higher tariffs on captive power plants, industrial and commercial consumers. The Petroleum Division added that, as part of reforms agreed with the IMF, a levy had been imposed on the captive power plants. As a result, gas prices for them have increased, consumption has declined and the ability to cross-subsidise residential consumers has gone down. It was highlighted while discussing a court case in Balochistan relating to Sui Southern Gas Company (SSGC). SSGC receives around 111 million cubic feet per day (mmcfd) of gas from Balochistan fields (Sui and Zarghon), which is insufficient to meet winter demand from domestic consumers in the province, which peaks at 210 mmcfd. To make up for the deficit, SSGC diverts gas from its sources in Sindh, which in turn faces low pressure and load management in winter. SSGC claims that more than 26 billion cubic feet (bcf) – 59% of the total of 44 bcf supplied to Balochistan — was either stolen or illegally consumed by tampering with gas meters. The Petroleum Division said that, as reported, while SSGC's operations in Sindh recorded unaccounted-for-gas (UFG) losses of 9.5% during financial year 2022-23, the losses in Balochistan stood at a staggering 59.7%. The loss resulting from low or no recoveries in Balochistan was estimated at Rs22 billion. Despite persistently high UFG losses, SSGC continued to operate and invest in the area to support the government's socioeconomic development agenda and to comply with orders issued from time to time by the Balochistan High Court regarding maintenance of adequate supply pressure during winters. The Balochistan High Court restrained SSGC in May 2023 from charging more than Rs5,700 in monthly gas bills. It also constituted a commission for making recommendations on gas tariffs to be charged in the colder areas of Balochistan. The commission made the following domestic tariff recommendations: for summer, 200 cubic metres at Rs250 per million British thermal units (mmBtu), totaling Rs2,551 per month; and for winter, 590 cubic metres at Rs500 per mmBtu, totaling Rs8,848 per month. Over five months, the maximum amount payable would be Rs62,092. Consumption above 590 cubic metres would attract the non-protected category tariff of Rs5,174 per month. The Petroleum Division shared that the Balochistan High Court, through its order dated June 13, 2024, directed SSGC to implement the commission's recommendations with retrospective effect from November 2023, resulting in revenue losses. In accordance with the notified tariff effective from February 1, 2025 under Section 8(3) of the Ogra Ordinance, 2002, monthly charges for two slabs were worked out as under: For consumption up to 200 cubic meters, the notified rate is Rs4,200 per mmBtu, totaling Rs15,827, plus Rs2,000 in fixed charges, taking the total monthly bill to Rs17,827. For consumption above 400 cubic meters, the gas charges are Rs106,441 plus Rs2,000 in fixed charges, totalling Rs108,441. The Petroleum Division argued that the tariff structure recommended by the commission conflicted with the government's approved tariff, causing revenue losses. It was further outlined that the Balochistan High Court's order was challenged by SSGC in the Supreme Court. The apex court, through its order dated October 24, 2024, directed the Oil and Gas Regulatory Authority (Ogra) to thoroughly review the commission's report and finalise recommendations through hearings and consultations with all relevant parties. The cabinet was informed that Ogra held a hearing on November 11, 2024 and issued its findings on November 22. In its report, Ogra emphasised that commission members could not cite any statutory provision for recommending a special tariff for Balochistan consumers.
Business Recorder
16-07-2025
- Business
- Business Recorder
Moody's briefed about reforms, outlook
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb held a virtual engagement with Moody's Rating Agency (Moody's) on Tuesday to provide an in-depth briefing on Pakistan's macroeconomic outlook, reform agenda, and financial stability. An official statement issued by the Finance Division stated that Minister for Finance and Revenue, accompanied by Minister of State for Finance Bilal Azhar Kayani, governor State Bank of Pakistan, and senior officials from the Finance Division, Revenue Division, and other relevant ministries, briefed Moody's on the country's stabilising economy, reform drive, and global market re-engagement. The finance minister apprised the Moody's team of the significant strides Pakistan has made in stabilising its economy and laying the foundations for sustainable and inclusive growth. He underlined the successful completion of the final IMF review under the Stand-By Arrangement, including the disbursement of the second tranche and progress under the Resilience and Sustainability Facility (RSF), as key milestones that have restored confidence in Pakistan's economic management, the official statement noted. The minister highlighted a series of structural reforms undertaken by the government to anchor long-term stability. These included prudent fiscal measures in the recently announced budget, tariff and trade liberalisation geared towards export-led growth, and concerted efforts to rationalise expenditure. The ongoing discussions with the United States on preferential tariff access were also noted as making encouraging headway. The meeting further outlined Pakistan's re-engagement with global financial markets, including the successful arrangement of $1 billion in commercial financing from the Middle Eastern region, plans for an inaugural Panda bond, and Pakistan's intent to explore the Eurobond and other international debt markets as credit ratings improve. Aurangzeb and his team presented compelling evidence of macroeconomic recovery, including a sharp reduction in inflation, a cut in the policy rate, stabilisation of the exchange rate, a current account surplus, and a surge in foreign exchange reserves—crossing $14 billion by the end of June. Improvements in remittance inflows and export performance were also cited as signs of resilience and renewed investor confidence. The Moody's team was provided a comprehensive overview of Pakistan's reform journey, with a particular emphasis on improving the tax-to-GDP ratio through technology-driven tax administration reforms, digitisation of systems, and robust enforcement measures. The minister emphasised that under the direct oversight of the prime minister—who chairs regular meetings on tax reform—the government was implementing measures to expand the tax base, plug leakages, and enhance compliance. He noted that the Rs2 trillion revenue delta achieved this year had come through autonomous efforts, and the government was firmly committed to reaching a tax-to-GDP target of 13 to 13.5 percent in the next few years. The finance minister also addressed queries from the Moody's team and reiterated Pakistan's commitment to staying the course on macroeconomic reforms, including in areas of privatisation, restructuring of state-owned enterprises (SOEs), and right-sizing of government. Aurangzeb expressed optimism that the improving macroeconomic indicators and reform momentum would be positively acknowledged by rating agencies, further strengthening Pakistan's case to tap international markets and deepen its external sector stability. Pakistan, he affirmed, is ready to carry forward this journey of resilience, reform, and recovery to unlock long-term, inclusive, and export-oriented economic growth. Copyright Business Recorder, 2025
Express Tribune
15-07-2025
- Business
- Express Tribune
Aurangzeb briefs Moody's on Pakistan's reform push, stable outlook
Finance Minister Muhammad Aurangzeb speaks during a meeting with Moody's delegation in Islamabad on Tuesday. Photo: APP Listen to article Pakistan is re-entering global financial markets amid signs of macroeconomic stabilisation, with plans for its first Panda bond and ongoing talks for preferential tariff access with the United States to support an export-led growth strategy, Finance Minister Muhammad Aurangzeb said on Tuesday. In a virtual briefing with Moody's Investors Service, the finance minister outlined the country's macroeconomic turnaround, reform agenda, and external sector stabilisation efforts. Aurangzeb was accompanied by Minister of State for Finance Bilal Azhar Kayani and State Bank Governor Jameel Ahmad. The engagement, held at the Finance Division, was part of Islamabad's broader outreach strategy to regain investor confidence and improve its sovereign credit profile. According to an official statement, Aurangzeb highlighted Pakistan's recent macroeconomic gains, including a sharp drop in inflation, monetary easing through a reduction in the policy rate, exchange rate stabilization, and a current account surplus. He noted that foreign exchange reserves had crossed $14 billion by the end of June, aided by improved remittance flows and stronger export performance. The minister informed Moody's that Pakistan had successfully completed the final review under the IMF's $3 billion Stand-By Arrangement (SBA), which included the release of the final tranche. He also underscored progress under the Resilience and Sustainability Facility (RSF), terming both milestones as critical for restoring market credibility. 'The reform trajectory is firmly in place,' Aurangzeb said, pointing to recent budgetary measures aimed at fiscal consolidation, including expenditure rationalisation and a broadened revenue base. He reiterated that Pakistan is targeting a tax-to-GDP ratio of 13 to 13.5 per cent over the medium term. The Rs2 trillion revenue gain achieved this fiscal year, the minister noted, had come from autonomous administrative efforts, not through new tax measures alone. He stressed that tax reform remains a top priority under the direct oversight of the prime minister, with a focus on technology-driven enforcement, digitisation of tax systems, and plugging leakages. The team also apprised Moody's of ongoing discussions with the US regarding preferential tariff access for Pakistani exports, which Aurangzeb said were 'making encouraging headway.' The meeting served as a platform to showcase Pakistan's re-engagement with global capital markets. The finance minister revealed that $1 billion in commercial financing had already been secured from financial institutions in the Middle East. Additionally, Pakistan is actively working on launching its inaugural Panda bond — a renminbi-denominated bond to be issued in the Chinese market — and is exploring other international debt instruments, including a potential return to the Eurobond market, contingent on rating upgrades. He added that Pakistan remains committed to key structural reforms, including the privatisation and restructuring of state-owned enterprises (SOEs), as well as right-sizing of the federal government. Responding to queries, the minister reiterated that Pakistan is not looking for short-term fixes but is focused on building long-term, inclusive, and export-led growth, while expressing optimism that the reform momentum and macroeconomic stabilization would be reflected positively in future sovereign credit assessments. 'Pakistan is ready to carry forward this journey of resilience, reform, and recovery,' the finance minister concluded, signalling that the country was once again positioning itself as a credible investment destination.
Business Recorder
15-07-2025
- Business
- Business Recorder
Govt presents ‘compelling evidence' of Pakistan's economic recovery to Moody's
Finance Minister Muhammad Aurangzeb, in a key engagement on Tuesday, presented Moody's Ratings, a global credit rating agency, with 'compelling evidence' of Pakistan's economic recovery and reform momentum. Accompanied by Minister of State for Finance Bilal Azhar Kayani, the Governor of the State Bank of Pakistan (SBP) Jameel Ahmed, and senior officials from key ministries, Aurangzeb highlighted the country's progress in stabilizing the economy—including a sharp reduction in inflation, a cut in the policy rate, stabilization of the exchange rate, a current account surplus, and a surge in foreign exchange reserves—crossing $14 billion by the end of June. Improvements in remittance inflows and export performance were also cited as signs of resilience and renewed investor confidence, read a statement released by the Finance Division. During the in-depth session, the finance minister apprised the Moody's team of the significant strides Pakistan has made in stabilising its economy and laying the foundations for sustainable and inclusive growth. Moody's upgrades Pakistan's banking outlook to positive He underlined the successful completion of the final IMF review under the Stand-By Arrangement, including the disbursement of the second tranche and progress under the Resilience and Sustainability Facility (RSF), as key milestones that have restored confidence in Pakistan's economic management. Aurangzeb highlighted a series of structural reforms undertaken by the government to anchor long-term stability. These included fiscal measures in the recently announced budget, tariff and trade liberalisation geared towards export-led growth, and concerted efforts to rationalise expenditure. The ongoing discussions with the United States on preferential tariff access were also noted as making encouraging headway. The meeting further outlined Pakistan's re-engagement with global financial markets, including the successful arrangement of $1 billion in commercial financing from the Middle Eastern region, plans for an inaugural Panda bond, and Pakistan's intent to explore the Eurobond and other international debt markets as credit ratings improve. Govt to meet business community tomorrow, ahead of planned strike, says Aurangzeb As per the statement, the Moody's team was provided a comprehensive overview of Pakistan's reform journey, with a particular emphasis on improving the tax-to-GDP ratio through technology-driven tax administration reforms, digitisation of systems, and robust enforcement measures. Aurangzeb emphasised that the government was implementing measures to expand the tax base, plug leakages, and enhance compliance. He noted that the Rs2 trillion revenue delta achieved this year had come through autonomous efforts, and the government was firmly committed to reaching a tax-to-GDP target of 13 to 13.5% in the next few years. The finance minister also addressed queries from the Moody's team and reiterated Pakistan's commitment to staying the course on macroeconomic reforms, including in areas of privatisation, restructuring of state-owned enterprises (SOEs), and right-sizing of government. Aurangzeb expressed optimism that the improving macroeconomic indicators and reform momentum would be positively acknowledged by rating agencies, further strengthening Pakistan's case to tap international markets and deepen its external sector stability.
Express Tribune
14-07-2025
- Business
- Express Tribune
IMF sees growth ahead for Pakistan
IMF Pakistan's Representative Mahir Binici (left) at the Sustainable Development Policy Institute in Islamabad on July 13, 2025. Photo: APP Listen to article A senior International Monetary Fund (IMF) official said on Sunday that growth across the Middle East, North Africa (MENA) region and Pakistan was expected to strengthen in 2025 and beyond, despite "exceptional uncertainty" that could weigh on the global economic outlook. In a comprehensive guest lecture at the Sustainable Development Policy Institute (SDPI), IMF Resident Representative for Pakistan Mahir Binici, cautioned against elevated trade tensions, geopolitical fragmentation and weakening global cooperation. Binici, according to a press release issued here, reaffirmed the continued IMF support for Pakistan's economic and climate reform agenda and underlined the urgent need for prudent and forward-looking policy actions. Focusing on Pakistan, Binici noted that the country's performance under the IMF's Extended Fund Facility (EFF) had been "strong so far," adding that the successful completion of the first review by the IMF Executive Board in May 2025 was a key milestone. Binici emphasised that structural reforms remained central to Pakistan's long-term economic sustainability, particularly reforms that strengthened tax equity, improve business climate, and encourage private-sector-led investment. "Early policy measures have helped restore macroeconomic stability and rebuild investor confidence, despite persistent external challenges," he said. He also highlighted Pakistan's progress on climate-related reforms under the IMF's Resilience and Sustainability Facility (RSF). He said that key areas of reform under the RSF included enhancing public investment planning, promoting efficient and sustainable use of water resources, improving institutional coordination for disaster preparedness and financing, expanding availability and transparency of climate-related data. The press released said that Binici stressed that the support through "the RSF will not only strengthen Pakistan's climate resilience but also help unlock green investments and foster a more climate-conscious economic trajectory." The lecture was followed by a discussion on fiscal and monetary policy frameworks, external buffers, and the role of international institutions. Earlier, SDPI Executive Director Dr Abid Qaiyum Suleri dilated on multilateral cooperation in Pakistan's journey toward sustainable development. (WITH INPUT FROM APP)
