New York City announces it will close migrant center in Pakistan-owned Roosevelt Hotel

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.

ISLAMABAD: Pakistan’s telecommunication authority this week announced it has started granting licenses to virtual private network (VPN) service providers, saying the move would enable businesses to utilize their services for “lawful purposes” and ensure data security. 

Pakistan’s government last year cracked down on the use of VPNs, with the Pakistan Telecommunication Authority (PTA) asking businesses, freelancers and information technology (IT) companies to register their VPNs to ensure compliance with government regulations. It had warned that unregistered VPNs would be blocked. 

The government says its measures are meant to deter militants and other suspects who use VPNs to conceal their identities and spread “anti-state propaganda” and promote “blasphemous” or other illegal content online. Digital rights activists, however, say the government’s move against VPNs is an attempt to block vital tools that allow users to bypass restrictions in its bid to stifle criticism online. 

“The Pakistan Telecommunication Authority has initiated the licensing of Virtual Private Network (VPN) service providers under the Class License for the provision of data services in Pakistan,” the PTA said in a statement on Monday. 

The authority said it has approved the applications of two companies and granted them licenses to provide VPN services in the country. 

“This initiative enables businesses to utilize VPNs for lawful purposes, ensuring data security, privacy, and regulatory compliance while promoting transparency,” the PTA said. 

It encouraged VPN service providers to apply online for the Class License on the authority’s official website. 

Pakistan saw a sharp rise in the use of VPNs last year when the government banned social media platform X after allegations of rigging in general elections surfaced in February 2024. Pakistan’s election commission and the caretaker government that organized the polls reject the allegations. 

Rights activists say the government’s measures to regulate the use of VPNs are part of a wave of digital crackdowns, including its move to implement a nationwide firewall last year. 

The government said the firewall intended to block malicious content, protect government networks from attacks, and allow it to identify IP addresses associated with what the government described as “anti-state propaganda” and terror attacks.

The Pakistan Software Houses Association (P@SHA), the country’s top representative body for the IT sector, warned in November 2024 that Internet slowdowns and the restriction of VPN services could lead to financial losses and closures, and increase operational costs for the industry by up to $150 million annually.