Officials here confirmed the IMF's mission, planned for Wednesday, had been postponed as Pakistan government was locked in a row over energy tariffs with foreign power producers.

Several economists blamed government of prime minister Nawaz Sharif for `mishandling' the issue with independent power producers (IPPs) after filing criminal charges against two companies for alleged corruption and kickbacks.

The government last week terminated a power purchase agreement with Hub Power Co (Hubco), run by British National Power, and ordered federal investigation agency to probe its accounts.

Hubco, owned by a consortium including Saudi, US, Japanese, French, Italian and Malaysian companies, produces 1,200 megawatts of electricity.

A Paksitani court later ordered British-run Kot Addu Power Co(Kapco) to cut its electricity tariff.

An IMF spokesman in Washington said, "The resumption of discussion depends to a great degree on the satisfactory resolution of government's conflict with independent power producers and the issue of Water and Power Development Authority (Wapda), including electricity tariffs.

"If these issues are satisfactorily resolved, IMF stands ready to proceed on a mission to finalise details of Pakistan's macro-economic programme."

Sharif's advisor, Hafiz Pasha, has said IMF was on and the visit would be rescheduled, but did not indicate any date.

Pakistan was expected to finalise a $1.56 billion loan from IMF, and the postponement of the mission would be a severe blow to the government's efforts to recover from a financial crunch.

The country's external debts stand at $32 billion and sources said it had to pay around $1 billion in debt servicing by December.

Economist Asad Saeed said the government policies could create `economic turmoil' in Pakistan and `the resultscould be much worse than what we recently witnessed in Indonesia.'

"The political leadership has already defaulted on domestic loans. They are now heading towards default on international loans," he added.

Press reports said, besides the action against power producers, Sharif's decision to reduce domestic power consumption charges by 30 per cent surprised the World Bank and IMF executives.

Sources said the World Bank, which has been insisting on implementation of structural reforms in the energy sector, had conveyed its displeasure over the reduction in power tariff by the state-run Wapda.

The decision to reduce utility bills by Wapda, already facing a financial crisis, was Sharif's `political gimmick,' Saeed observed.