Pakistani Finance Minister Shaukat Aziz said Sunday he hoped the settlement of a three-year-old power tariff row with the U.K.-run Hub Power Co. (Hubco) would restore investor confidence in the country.
"This is clearly a turning point for Pakistan in term of its relations with investors and in terms of its economic activity," Aziz told a news conference.
"It will encourage investors to look at Pakistan as an investment-friendly destination which offers lot of good opportunities for investors all over the world," he said.
The settlement emerged after three days of negotiations between the military government and senior Hubco executives late Saturday.
Hubco, the state-run Water and Power Development Authority (WAPDA) and the government of Pakistan had "resolved all outstanding issues relating to the long-standing tariff dispute," the minister said.
WAPDA chief Zulfikar Ali Khan said Hubco had agreed to reduce the power tariff from 6.5 cents per kilowatt hour to 5.6c.
The reduction will amount to annual savings of $63 million dollars and a total of $3 billion over the remaining 27 years of the life of the project, he said.
"Everybody had to give and take and everybody contributed," Aziz said. "We are very pleased that this agreement has been concluded. The dispute has been "hurting investor confidence both globally and within Pakistan," he said.
He also praised the role played by the World Bank. "Over the last few months they have been active catalysts in getting this issue resolved."
The agreement reflects military ruler Gen. Pervez Musharraf's "commitment to create a conducive environment for local as well as foreign investments," he said.
Hubco is owned by a consortium led by International Power of the U.K. and Saudi Arabia's Xenel Industries. The World Bank-backed $1.54-billion project producing 1,292 megawatts of electricity, more than 10 percent of Pakistan's total generating capacity, is the biggest private-sector power project in the country.
The row with Hubco erupted in 1997 when then Prime Minister Nawaz Sharif's government alleged contracts with exorbitant rates were secured through corruption during the regime of his predecessor Benazir Bhutto. Hubco has denied any wrongdoing. -AFP.
(C)-Agence France PResse.
© 2000 Mena Report (www.menareport.com)
