FinMin Aurangzeb stresses structural energy reforms amid outcry over IPPs

• Minister underscores need to move towards structural solutions.
• Says efforts are being made to bring agriculture into tax regime.
• Chief Ministers to legislate regarding agri-tax, FinMin says.
  

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Sunday stressed the need for urgent structural reforms in the energy sector to address issues related to independent power producers (IPPs), inflated electricity bills, and other irregularities that burden the national exchequer and consumers.

"We need to move towards structural solutions. We have provided an immediate solution, but we must also follow through with structural reforms," the minister said during a press conference in Islamabad.

His comments come amid outcry over capacity payments being made to IPPs through consumers' monthly electricity bills, which are already burdened with taxes and the highest tariffs in the country’s history.

Political leaders, civil society, and the general public have criticised the government for increasing power rates and have called on authorities to revisit their agreements with IPPs. 

The Jamaat-e-Islami (JI) has also taken to the streets, staging a sit-in in Rawalpindi against the payments being made to IPPs and the "inflated electricity bills."

Cash-strapped consumers are being forced to pay skyrocketing power bills at a time when the headline inflation rate has reached 12.6% (June 2024).

"We can make emotional decisions and react emotionally, but we also need to attract both local and foreign investment. We cannot completely disregard the integrity of our agreements with the IPPs," Aurangzeb said.

The finance minister emphasised that short-term and knee-jerk reactions will not lead to a comprehensive structural transformation of the country's various sectors of economy. 

Despite the government taking steps such as introducing an industrial package, ending cross-subsidies, and providing subsidies for consumers using up to 200 units, more needs to be done.

He stated that the government was making every effort not to burden the low-income section of society and mentioned plans to include agriculture in the tax regime, with chief ministers of all provinces responsible for enacting agri-tax legislation.

Regarding non-filers, the finance minister said there are at least 4.9 million non-filers, and the government had data on their lifestyles.

Notices will be issued to non-filers in a centralised manner, and tax officers will not issue notices directly, he added.