The International Monetary Fund's representative in Islamabad, Esther Perez Ruiz, has clarified that the money lender had not asked Pakistan to renegotiate energy deals made under the China-Pakistan Economic Corridor (CPEC), terming the reports "simply untrue".
Ruiz gave the clarification in a statement yesterday (Wednesday) that did not specify what the rebuttal was in response to.
The Express Tribune had reported last week that the IMF had asked Pakistan to renegotiate energy deals made under the CPEC before making payments of approximately Rs300 billion to Chinese power plants.
"The global lender has asked the government to treat the Chinese CPEC power plants at par with the power plants established under the 1994 and 2002 power policies," the report quoted sources as saying, adding that they had further confirmed that the "IMF suspected that the Chinese IPPs (independent power plants) might have been overcharging Pakistan and there was a need to reopen these deals".
Moreover, the report stated that sources in the finance ministry had divulged that the IMF had also objected to giving Rs50bn to Chinese IPPs in February without renegotiating the deals.
The report also included Ruiz's comments, saying that she had "emphasised the need for equitable treatment of all power sector stakeholders due to the limited fiscal space".
While the report had no confirmation or rejection by Ruiz about the IMF asking Pakistan to renegotiate CPEC energy agreements, she dismissed the report in her statement issued yesterday.
"The IMF did not ask Pakistan to renegotiate CEPC [sic] IPP contracts. These claims are simply untrue. Rather, the IMF supports the government’s multipronged strategy to restore energy sector viability, which shares the burden of restoring viability across all stakeholders—the government, producers, and consumers," the statement read.
The statement has come as the government endeavours to comply with IMF's objectives in hopes to resume its $6bn billion loan facility, which has been stalled since April.
The IMF loan facility has been paused as negotiations between the new coalition government and the international money lender remain inconclusive, with the latter earlier expressing reservations over fuel and energy subsidies introduced by the previous PTI government and now over targets set by the new government for the upcoming fiscal year.
In a related move, the government raised fuel prices by up to 29 per cent on Wednesday, (yesterday), removing fuel subsidies.
This is the third cut in fuel subsidies in about 20 days announced by Finance Minister Miftah Ismail during a late-night press conference, where he said the prices of all products had now been brought to their purchase price and the element of subsidy or price differential claim had been eliminated.
Earlier in May, he had stressed during a press conference the need to honour all commitments made with the IMF under a deal finalised by the PTI government, terming the promises "sovereign". But, he had added, that promises they made to block the CPEC had no chance to stand.
The minister had not further elaborated on the promises he was referring to regarding the CPEC.