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Finance Minister Dr Hafeez Shaikh said on Saturday that the energy sector needed restructuring by increasing the role of private sector since the government could no longer sustain “such a heavy burden”, recalling that “we have already provided one trillion rupees in subsidy over the past four years”.

The present situation amounts to providing electricity below the actual cost of generation, said Mr Shaikh in a speech at the Karachi Press Club.

The finance minister emphasised the need for improving corporate governance of these projects for overcoming inefficiency and finding a sustainable energy mix and reforming tariff system and completing new projects expeditiously.

He blamed the yawning gap in demand and supply and corporate inefficiency for the power crisis.

Dr Shaikh, who spoke at length on the need to strengthen democratic institutions, was confident that despite difficulties the government would be able to achieve the tax collection target of Rs1, 952 billion, which was 25 per cent more than Rs1,558

billion of the previous year.

He claimed that tax collection had improved and it would ensure self-reliance.

In the first five months (July-Nov) of the current financial year, the revenue collection was higher by 28 percent (Rs640 billion) over the same period last year.

Asked about the impact of any possible slash in aid by the West, the minister avoided any direct comment on the US-led pressure mounted on Pakistan of late. In reply to a question about higher mark-up rate, he emphasised the need for banks to increase deposits so that they had liquidity to advance credit.

He pointed out that the government had paid Rs50 billion under the Benazir Income Support Programme to the poor under a cash transfer scheme. This was a targeted subsidy programme to ensure that the poorest segment of the society should not be left behind, he added.

Dr Shaikh said the last year’s devastating floods had caused a loss of $10 billion to the economy and eaten up two per cent of the GDP. Increase in oil prices in the international market also generated lots of pressure on the economy, he added.

Referring to the threat to the country’s security, he said the government would cut its own budget as well as of other sectors to ensure national security. He said exports, remittances and foreign exchange reserves had increased despite shocks to the economy.

He emphasised the need for widening the tax net and said that if the government did not make people pay their taxes it could not expect foreigners to come to its assistance.

Recalling achievements of the PPP-led government, the provinces had been given significant autonomy under the 18th Amendment. An additional amount of Rs800 billion was being provided to the provinces under NFC Award and as a consequence the federation would get only 40 per cent of the national resources against previous 54 per cent, he added.

He said the State Bank was made more independent to devise monetary policy without any pressure.

Dr Hafeez underlined the need for unity among all institutions of the country to jointly face internal and external challenges.

He said that in the world scenario where major economies were facing problems and big international organisations were closed down because of recession, Pakistan needed to create an atmosphere where people had faith in its solidarity, economy and security.

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