Pakistan to go bankrupt if power sector not reformed, warns IMF

[ajpirzada]

its not about IMF loans etc which will make us go bankrupt but excessive subsidy on electricity which the government is giving. remember we only have 9 to 10% of tax to GDP ratio

what i am saying is let the power producers decide the price themselves. it will then be easier for the government to allocate certain amount of subsidy for certain groups in a more effective manner. also we will get rid of circular debt as government will not be owing any money to power generation firms.

 

[Last Hope]

its not about IMF loans etc which will make us go bankrupt but excessive subsidy on electricity which the government is giving. remember we only have 9 to 10% of tax to GDP ratio

what i am saying is let the power producers decide the price themselves. it will then be easier for the government to allocate certain amount of subsidy for certain groups in a more effective manner. also we will get rid of circular debt as government will not be owing any money to power generation firms.

Making the power industry Private was the biggest mistake ever made in power sector.
Government should collect funds, and open up a couple of power plants, supplying electricity at lower rates.
This would attract large customer database, and would make the supply of private power plants go low.
They would be forced to decrease the prices, increase the efficency or even sell the plants to government.
This would be a HUGE leepforward in the power sector inflation.
The government, as well as the citizens, would benefit from this!
(I am a Bussiness studies student so feel free to aske me questions/ argue about it)

 

[ajpirzada]

Making the power industry Private was the biggest mistake ever made in power sector.
Government should collect funds, and open up a couple of power plants, supplying electricity at lower rates.
This would attract large customer database, and would make the supply of private power plants go low.
They would be forced to decrease the prices, increase the efficency or even sell the plants to government.
This would be a HUGE leepforward in the power sector inflation.
The government, as well as the citizens, would benefit from this!
(I am a Bussiness studies student so feel free to aske me questions/ argue about it)

first question: was the industry really privatized? after all it was/is the government which decides the per unit price.

second question: once you let the producers decide the price themselves, you will have many new producers entering the market and therefore creating competitive environment. and a competitive environment means that everyone would offer the lowest possible rate. this is exactly what happens in UK. you have various power companies competing against each other for more market share.

final comment: we dont have a proper market for power sector which is why we are facing this electricity deficit. had there been well functioning markets (which could never get developed due to consistent government interventions), supply and demand would have matched each other.

 

[Cityboy]

CIA is the biggest problem. CORRUPTION, INCOMPETENCY , ARROGANCE.

RAW is biggest problem..

Radical sermons, Accontability ,Wasting of resources...

hope Pakistan to come out from this tough time..we want stable and prosperous south asia...

 

[Last Hope]

first question: was the industry really privatized? after all it was/is the government which decides the per unit price.

second question: once you let the producers decide the price themselves, you will have many new producers entering the market and therefore creating competitive environment. and a competitive environment means that everyone would offer the lowest possible rate. this is exactly what happens in UK. you have various power companies competing against each other for more market share.

final comment: we dont have a proper market for power sector which is why we are facing this electricity deficit. had there been well functioning markets (which could never get developed due to consistent government interventions), supply and demand would have matched each other.

Nice Qs.
Answer 1) Yes it was by Zulfiqar Ali BHutto
Answer 2) Concept of Uk is different, they are competitve, but our power companies owners are not in a mood of competition. They want highest possible profits (Thats why I intorduced the plans for a government PP to start competetion)

 

[Martian]

Technically speaking, a country cannot go bankrupt. For example, when a company declares bankruptcy, its asstes are sold and it ceases to exist. However, a country may default on its payment obligations but still it can survive. There are many examples like latin american countries defaulted, etc. In early 1990s, India had to pledge its gold researves to get loan from IMF.
Countries like Zimbabwe can survive in difficult financial conditions.
Risks of such situtaion could be very hamrful like:
- Hyper inflation
- Capital flight
- Credit rating degeradation
- Adverse FX impact
- Expensive external loans (incraesed interest payments)
- Increased poverty
- Many more

 

[ajpirzada]

Nice Qs.
Answer 1) Yes it was by Zulfiqar Ali BHutto
Answer 2) Concept of Uk is different, they are competitve, but our power companies owners are not in a mood of competition. They want highest possible profits (Thats why I intorduced the plans for a government PP to start competetion)

1. u didnt get my point. yes it was privatized but not in real sense. mainly because private sector is still not allowed to set per unit price which is done by the government.

2. no one wants competition. even in UK, companies want to make as much profit as possible. Its the job of the regulator to create a competitive environment. and this can only be done if we make the environment feasible for other companies to come in and invest. but this will not happen until we deregulate the power sector market.

 

[Last Hope]

1. u didnt get my point. yes it was privatized but not in real sense. mainly because private sector is still not allowed to set per unit price which is done by the government.

2. no one wants competition. even in UK, companies want to make as much profit as possible. Its the job of the regulator to create a competitive environment. and this can only be done if we make the environment feasible for other companies to come in and invest. but this will not happen until we deregulate the power sector market.

1) even the gas stations are selling at slightly jightier price than set by gov.

2) comp would increase efficiency and output.
Every company would want higher profits, so they would like their product to be best in it's own kind so it could be sold in more quantity than others...

 

[Peacefull]

its not about IMF loans etc which will make us go bankrupt but excessive subsidy on electricity which the government is giving. remember we only have 9 to 10% of tax to GDP ratio

what i am saying is let the power producers decide the price themselves. it will then be easier for the government to allocate certain amount of subsidy for certain groups in a more effective manner. also we will get rid of circular debt as government will not be owing any money to power generation firms.

How about a new title for this ?

IMF will go bankrupt if countries like pakistan don't take loans from it ?