IFC, other lenders urge Pakistan to rethink move to renegotiate power contracts

Technicians are silhouetted as they fix cables on a power transmission line in Karachi, Pakistan, on January 9, 2017. (REUTERS/File)
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Updated 25 February 2025
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IFC, other lenders urge Pakistan to rethink move to renegotiate power contracts

  • Development finance institutions say contracts with independent power producers cannot be revised without lender approval
  • Pakistan is working to revise agreements with 14 IPPs to lower electricity tariffs and save approximately $5 billion to national exchequer

KARACHI: The International Finance Corp. and other global financial institutions have urged the Pakistan government to rethink its move to renegotiate power purchase agreements (PPAs) with wind and solar energy producers, saying contracts with independent power producers (IPPs) cannot be amended without prior lender approval, according to a letter seen by Arab News on Tuesday. 

Last month, the Pakistani cabinet approved revisions to agreements with 14 IPPs to lower electricity tariffs for households and businesses and save approximately Rs1.4 trillion ($5 billion) for the national exchequer. 

About a decade ago, Pakistan approved dozens of private projects by IPPs, financed mostly by foreign lenders, to tackle chronic shortages. But the deals, featuring incentives such as high guaranteed returns and commitments to pay even for unused power, resulted in excess capacity after a sustained economic crisis reduced consumption. Short of funds, the government had built those fixed costs and capacity payments into consumer bills, sparking protests by domestic users, industry bodies and political parties. 

The need to revisit the deals was an issue in talks for a critical staff-level pact with the International Monetary Fund (IMF) for a $7-billion bailout approved last year. 

In a letter signed by eight development finance institutions (DFIs) and addressed to the Pakistani ministries of finance and energy, the lenders have raised concern about the “non-consultative” nature of the contract renegotiation process and warned that it could undermine investor confidence.

“We... wish to emphasize that under the terms of their financing and investment agreements, the IPPs we have financed are not permitted to agree to changes to any major project document, including the PPA, without prior written approval from the lenders,” the letter, dated Feb. 18 and signed by agencies such as the World Bank’s International Finance Corporation (IFC), the Islamic Development Bank (IDB) and the Asian Development Bank (ADB), said. 

The letter acknowledged the challenges faced by Pakistan’s power sector and commended certain government measures aimed at addressing long-term structural issues.

However, it cautioned that “renegotiating PPAs in a non-consultative manner will be detrimental to the long-term development of the sector,” potentially eroding investor confidence and deterring essential future private investment.

The DFIs said they had collectively invested $2.7 billion in Pakistan over the past 25 years to support the development of the country’s power sector and create a conducive environment for private sector investment. 

“We hope the Government will reconsider its approach to PPA renegotiations and work to find alternative ways of solving the energy sector’s structural challenges,” the letter concluded. 

The letter comes after a visit to Pakistan by IFC Chief Makhtar Diop during which he said the organization aimed to invest $2 billion in the country annually over the next decade to support private sector growth.

Last October, Pakistan’s energy ministry said it had ended power purchase contracts with five private companies, including one with the country’s largest utility, Hub Power Company Ltd, that should have been in place until 2027, to cut costs.


WWF-Pakistan hails community-led efforts to protect markhor on international awareness day

Updated 24 May 2025
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WWF-Pakistan hails community-led efforts to protect markhor on international awareness day

  • Markhors are large wild goats native to the mountainous regions of South and Central Asia
  • They are Pakistan’s national animal and are currently listed as ‘Near Threatened’ by IUCN

KARACHI: A leading conservation group in Pakistan on Saturday praised local communities for helping protect the endangered markhor species, saying people’s efforts had reversed population decline and expanded habitat ranges, as the country marked the International Day of the Markhor.

Markhors are large wild goats native to the mountainous regions of South and Central Asia, including Pakistan, Afghanistan, India and parts of the Himalayan range. They are Pakistan’s national animal and are currently listed as “Near Threatened” by the International Union for Conservation of Nature, the world’s oldest and largest global environmental network, due to habitat loss, poaching and human disturbance.

The World Wide Fund for Nature’s Pakistan office (WWF-Pakistan) credited close coordination between communities, conservationists and government departments in regions such as Gilgit-Baltistan, Khyber Pakhtunkhwa and Balochistan for positive conservation outcomes.

“Through capacity-building programs and engagement of local communities in conservation initiatives, a positive population trend has been observed in the markhor species,” it said in a statement.

Observed annually on May 24, the International Day of the Markhor was designated by the United Nations General Assembly in 2024 to raise awareness of the species’ ecological importance and the need for its protection.

“Conservation is not just about saving a species, but it is about preserving our shared future in harmony with nature,” said Hammad Naqi Khan, Director General of WWF-Pakistan.

The organization noted the International Day of the Markhor was an opportunity to recognize the ecological value of mountain landscapes, raise awareness of conservation challenges and honor the communities that helped pull the species back from the brink of extinction.


Pakistan tells UN India politicizing river flows by halting Indus treaty

Updated 24 May 2025
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Pakistan tells UN India politicizing river flows by halting Indus treaty

  • Ambassador Usman Jadoon calls access to clean water a fundamental human right
  • He says India announced treaty suspension to cut off the lifeline of 240 million people

ISLAMABAD: Pakistan told a United Nations forum this week India was using river waters as a political weapon by suspending the Indus Waters Treaty (IWT), warning that Islamabad would not allow New Delhi to cut off the lifeline of 240 million people or turn water into a tool of coercion.

The remarks came during an Arria-formula meeting of the UN Security Council, an informal session allowing open discussion on pressing international issues. The forum was held as tensions escalated following India’s decision to suspend the 1960 IWT.

While New Delhi has cited a recent militant attack in Indian-administered Kashmir to justify the move, Islamabad has denied any involvement and warned that blocking Pakistan’s access to river waters threatens regional stability and violates international law.

Addressing the forum on Friday, Ambassador Usman Jadoon, Pakistan’s deputy permanent representative to the UN, emphasized that access to clean water was a fundamental human right. He condemned India’s actions, pointing out the suspension of the IWT constitutes a grave violation of international law.

“India’s decision to illegally and unilaterally suspend the 1960 Indus Waters Treaty, aiming to impede the flow of water guaranteed to Pakistan under the Treaty, is a grave violation of international law, including human rights law, the treaty law and customary international law,” Jadoon said.

He further criticized statements from Indian leadership suggesting intentions to “starve the people of Pakistan,” describing such rhetoric as dangerous and perverse.

Jadoon called upon India to adhere to its legal obligations and refrain from actions that could disrupt the flow of rivers vital to Pakistan’s population.

“We strongly condemn India’s unlawful announcement to hold the Treaty in abeyance and call upon India to strictly abide by its legal obligations and refrain from stopping, diverting or restricting rivers that are a lifeline for 240 million people of Pakistan,” he continued. “We will never accept any such moves.”

The IWT, brokered by the World Bank in 1960, has been a cornerstone of water-sharing between the two nations. Its suspension marks a significant escalation in India-Pakistan relations, with potential implications for regional stability and humanitarian concerns.


Pakistan to cancel passports, register cases against deported citizens

Updated 24 May 2025
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Pakistan to cancel passports, register cases against deported citizens

  • Move follows Middle East complaints over Pakistani nationals involved in begging
  • A committee has also been tasked with strengthening passport rules and regulations

KARACHI: Pakistan’s federal government on Saturday decided to take stringent measures against its citizens deported from other countries for illegal activities by canceling their passports and registering criminal charges, in a bid to curb a growing issue that officials say is tarnishing the country’s international image.

The move follows mounting complaints, particularly from Middle Eastern countries, about public begging and undocumented migration involving Pakistani nationals.

The decision was made at a high-level meeting chaired by Interior Minister Mohsin Naqvi in Islamabad.

“It was decided during the meeting that FIRs [First Information Reports] would be registered against deported individuals and their passports would also be canceled,” an official statement released after the meeting said. “The deportees would be placed on the Passport Control List for five years.”

Earlier this year, Pakistan’s Federal Investigation Agency (FIA) said approximately 4,000 beggars had been deported by Saudi Arabia from 2022 until the end of 2024.

“Deportees are causing embarrassment for Pakistan at international level,” Naqvi said. “Thus, no leniency will be shown to them in the future.”

To further tighten passport regulations, the interior ministry also formed a committee led by the interior secretary.

According to the statement, the committee has been tasked with proposing reforms to strengthen the passport issuance process and enforce stricter scrutiny.

Last month, over 100 Pakistanis deported from various European countries arrived in Islamabad, with officials indicating that many had been involved in fraudulent or undocumented migration.

The latest measures build on earlier actions by the interior ministry aimed at discouraging illegal migration and curbing human trafficking.

Naqvi had previously announced plans to block the issuance of new travel documents to deportees and crack down on travel agents implicated in human smuggling.


Pakistan’s army chief hosts dinner for political leadership, praises their ‘foresight’ during India standoff

Updated 24 May 2025
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Pakistan’s army chief hosts dinner for political leadership, praises their ‘foresight’ during India standoff

  • The dinner was attended by President Zardari and Prime Minister Sharif along with other top officials
  • Field Marshal Asim Munir hails the military’s performance and the public’s resilience during the war

ISLAMABAD: Pakistan’s army chief praised the political leadership’s “strategic foresight” during a four-day military clash with India, according to an official statement on Saturday, as he hosted a dinner in their honor for their role in the conflict.

The event followed a brief but intense conflict earlier this month in which both nuclear-armed neighbors exchanged missile, drone and artillery strikes before agreeing to a US-brokered ceasefire.

As part of a series of honors marking Pakistan’s response, the government promoted the army chief, Syed Asim Munir, to the five-star rank of Field Marshal.

“In his remarks, the Chief of Army Staff expressed profound gratitude to the political leadership for their strategic foresight during Marka-e-Haq and lauded the seamless inter-services coordination that ensured operational success in Operation Bunyanum Marsoos,” Pakistan’s military media wing, ISPR, said in a statement.

The dinner brought together top political and military leaders including President Asif Ali Zardari, Prime Minister Shehbaz Sharif and service chiefs, as well as leaders from major political parties.

All the participants hailed the military’s performance and the public’s resilience during what officials described as a defining moment for the nation.

Munir also praised Pakistan’s youth and media for acting as a “steel wall” against what he called a disinformation campaign launched by India.

He further acknowledged the role of Pakistani scientists, engineers and diplomats, calling their efforts “critical” to the national response.

The gathering, according to the ISPR, served as a demonstration of unity and reaffirmed Pakistan’s collective resolve to move forward with “renewed strength and cohesion.”


Indian troops shoot dead Pakistani crossing frontier

Updated 24 May 2025
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Indian troops shoot dead Pakistani crossing frontier

  • Incident occurred two weeks after India and Pakistan agreed to a ceasefire following a four-day conflict
  • India’s border force says the man crossed the international border and failed to stop when challenged

AHMEDABAD: Indian border troops shot dead a Pakistani man who they said had crossed the international frontier and did not stop when challenged, the force said Saturday.
The shooting comes two weeks after arch-rivals India and Pakistan agreed a ceasefire after a four-day conflict, in which more than 70 people were killed in missile, drone and artillery fire.
India’s Border Security Force (BSF) said its troops Friday evening had spotted “one suspicious person advancing toward the border fence,” which lies beyond the international frontier in Gujarat state’s Banaskantha district.
“They challenged the intruder, but he continued to advance, prompting them to open fire,” the BSF said in a statement. “The intruder was neutralized on the spot.”
A photograph released by the force showed a dead man with greying hair.
The recent conflict between the nuclear-armed rivals was triggered by an attack on tourists in Indian-administered Kashmir on April 22, the deadliest on civilians in the contested Muslim-majority territory in decades.
New Delhi blamed Islamabad for backing the militants it said carried out the attack, charges that Pakistan denied.