People should brace for another jump in prices. The government plans to hike power tariff by up to 95 paisa a unit as it embarks upon the second phase of electricity subsidy withdrawal plan under which Rs20 billion worth of subsidy will be removed. In the first phase, Rs42 billion subsidy had been taken away, thus pushing the total withdrawal to a hefty Rs62 billion. Nepra is likely to allow the fresh increase in power rates. Only a few days ago, the authorities had announced that the country was producing record electricity. This came as happy news, but the joy proved short-lived. Considering that the increase in power tariff will take place across the board, it will affect most of the industrial, agriculture and commercial sectors, besides domestic consumers.
Households consuming less than 200 units a month would be exempted from the new tariff. But since a raise in power tariff for commercial and industrial sectors will raise the cost of production, it is going to affect all consumers without any distinction. And this is coming at a time when the power and gas tariffs, as well as the prices of petroleum products, are already at historic highs in the country, and have eroded the value of the people’s hard-earned income.
Obviously, the power subsidy is being withdrawn on the IMF instructions. True that right now the government has no other option but to comply with the harsh instructions from the international lender as it has to secure the much-needed tranche of one billion dollars out of the total loan package of $6 billion. However, it also makes a case to highlight the perennial failure to tackle the menace of circular debt — which is galloping even faster under the current dispensation led by the PTI — by curbing power theft to improve recoveries and reducing transmission and distribution losses.
Published in The Express Tribune, February 1st, 2022.