He said that the two steps taken would certainly help reduce the trade deficit considerably in the months ahead with positive impact on the current account.
Ismail said that the budget deficit would not be addressed as long as fiscal imbalance created by the 7th NFC Award after the tilt of resources was shifted towards provinces from federation was not revisited. He said that there is need to revisit distribution of resources from the divisible pool between federal government and provinces as the federation needs to be strengthened in terms of resources.
Special Assistant to Prime Minister on Economic Affairs Division said, "It is important to empower provinces but not at the cost of the federation." He also acknowledged a major rise in withholding taxes during the last couple of years but stated that the Federal Board of Revenue claims that the tax net has increased by 50 percent during the last four years with the number of filers increasing to 1.2 million from 0.7 million. Miftah Ismail acknowledged that there was corruption in the FBR.
Ismail defended the LNG deal and said it has three components - LNG terminal, LNG import and construction of pipeline to transport LNG to power plants.
The government, he claimed was able to sign the cheapest LNG deal with Qatar after months' long negotiations by the price negotiation committee. He said he was also a member of the price negotiation committee and was directly involved in the negotiations with the other side. He claimed that the LNG deal at 13.37 percent of Brent oil was the lowest at that time. Pakistan will be able to revisit the contract after 10 years.
While justifying the long-term LNG contract without responding to a question whether it was economically viable since it was a buyers market, he maintained that the spot price for the last few days has been 15 percent of Brent oil price and a long-term contract was needed to ensure supply of gas to power plants for tariff determination. He said gas was being preferred over furnace oil for two reasons: (i) cheaper and; (ii) more efficient.
Miftah Ismail maintained that 1,000 MMBTU gas is 30 percent cheaper than the same volume of furnace oil and produces 50 percent additional electricity. "We are also trying to import LNG from Malaysia and other countries and want private sector to take over the business and some of them have started showing an interest. Pakistan has been able to secure cheapest LNG deal, set up the terminal and the pipeline to transport LNG in record time," he added.
He said there will be no gas shedding for domestic consumers this winter with the availability 2.4 billion cubic feet gas in the system - 1,200 mmcfd domestic and 1,200 mmcfd after the arrival of LNG shipment by next month. He said that 1,200 mmcfd LNG will reach Pakistan in November 2017.
Copyright Business Recorder, 2017