Power bills and domestic consumers

KARACHI: There was a long queue at the K-Electric office in North Nazimabad. The gatekeeper, a woman with a register, takes the CNIC and billing information for entry, while the guard decides who enters and when.

A majority of those standing in the queue have been to the centre multiple times over the last few months. Some want to pay their high power bills in instalments, some want to get a new connection, while others dispute sanctioned load discrepancies and billed amounts.

Those who dispute the billed amounts are only offered one solution – a bill broken up in instalments that they have to pay over the next few months, failing which, the privatised utility company has the power to disconnect them from the grid.

These consumers would be in for another shock soon once the government decides to collect the Rs65 billion that the International Monetary Fund (IMF) has asked Pakistan to pass on to consumers of electricity. During peak summer, the government had deferred the amount in the shape of fuel price adjustments (FPA).

Tahir Abbas, head of research at Arif Habib Limited, said that the FPA was deferred by the government due to a variety of reasons, the biggest being the devastating floods. “The relief was given to consumers who use up to 300 units/month, based on an understanding that their capacity to pay was compromised after the floods,” he said, adding that the Rs65 billion in the shape of FPA had to be paid sooner or later.

On a query how this would impact consumers and inflation, Abbas said, “We generate around 137 billion GWh with 18 percent T&D losses; 45 percent is used by domestic consumers, and of these 80 percent are those who use less than 300 units per month. So a one-time adjustment would likely be around Rs6.5/unit. On inflation, this impact would be 0.7 percent.”

Currently, the average electricity tariff as per the Pakistan Bureau of Statistics stands at Rs6.57/unit.

Syed Muzaffar, a retired pharmacist, said he was sick of the constantly changing tariff. Showing his bills, he said in August, K-Electric charged Rs25.53/unit, in September Rs29.30/unit, in October Rs33.83/unit, in November Rs25.53/unit and in December Rs22.14/unit. This was apart from charges like uniform quarterly and fuel adjustment, electricity duty, sales tax, income tax, TVL fee, and a one-time KMC fee, he pointed out.

Power bills have increased exponentially for consumers. Compromised affordability has forced the consumers to slash the use of air conditioners, refrigerators, irons and microwaves.

Some, living in joint family systems, like Farrukh*, a resident of Hyderi, have installed multiple connections at home, which take months to install.

He went to the K-Electric office to get a fourth meter for the one horsepower each donkey pump and worm pump, but was rejected. “For the other meters, we had to divide our kitchen and add a partition wall. K-Electric has become a reason for ‘batwaras’ (partition or creating barriers between families),” he said sarcastically. “I was told that to have a meter, one needed a separate kitchen and a partition/separate entrance, motors cannot be put on a separate meter.”

Several consumers complained that they had to wait for months to get a new connection as the K-Electric officials kept sending them away to fetch one document or another. “These are just delaying tactics,” said an agent, who works on documentation for new connections.

Access to electricity is a universal human right, and falls under the United Nations Sustainable Development Goal 7. National Electric Power Regulatory Authority (NEPRA) in its state of industry report 2021 says, “Access to affordable electricity is a necessary condition to raise living standards of people and accelerate the economic progress of the country.” But at the same time, the report, without citing the exact numbers, adds that “millions of people living in the remote areas of the country still do not have access to electricity”.

Lack of access and poor reliability could be costing Pakistan at least $4.5 billion (1.7 percent of gross domestic product) a year as per a 2018 policy research paper of the World Bank Group. It also estimated that 50 million people in Pakistan could be living without a connection to the electric grid.

Being aware of these issues, NEPRA admits that the biggest challenge currently faced by the power sector was the high cost of electricity. “The unutilised ‘take or pay’ power generation capacity, impact of ‘must run’ power plants, old in-efficient power plants, increasing capacity payments, whopping circular debt, weak transmission and distribution system, lack of coordination among relevant power sector stakeholders, improper planning, poor governance, use of primitive technology, taxes, fees and levies in electricity bills etc are amongst the factors making the price of electricity unaffordable for consumers,” it says.

Such reports and recognition of issues however hold no value in real terms, especially when power sector issues, instead of getting resolved, keep multiplying.

Mahrukh*, a housewife said the power bill was a constant issue at her home. “We live in a joint family. And though my husband and I do not have an air conditioner, my dewrani (sister-in-law) brought one in her dowry, and we had to bear the brunt too, because all household expenses, including the bills are divided equally between my husband and his younger brother,” she lamented. “With two school going children amid sky-high prices, we are in extreme financial stress now. Even our December bill is Rs5,500 when last year it was way less.”

Another consumer, wishing to remain anonymous, said that his unaffordable bill had forced him to think of getting a kunda connection.

Experts have pointed out already that an increase in tariff also increases theft in the power sector.

Tahir Abbas agreed with the opinion. “As tariffs go up, theft increases and recovery goes down.” However, he admitted that the sheer scale of the power sector had made things far more complicated and last year’s commodity super-cycle, when rates of coal, LNG, furnace oil etc shot up, just added to the fuel cost burden.

On top of that, dollar hike, 10 percent decline in dispatch growth contrary to NEPRA’s growth assumptions, and lower recovery of bills, made things worse. “In the first three months, the recovery ratio declined from last year’s average 93 percent to 83 percent. Transmission and dispatch losses increased from 15 percent to more than 17 percent. All these factors collectively created a huge gap in the power sector during the first five months of the current fiscal.”

Deferment of price adjustment was in addition to that. “The situation is tricky; there’s no money to fund a subsidy and the government also wants to continue with the IMF programme,” he reminded.

Pointing to the recent meeting chaired by Prime Minister Shehbaz Sharif, where he assured that the consumers would not be burdened further, Abbas said the government did not have an option, and would have to pass on the burden to all consumers.

“Now what we have to see is, if the government will stagger it, or do it in one go. If they stagger it, it will impact less, but if not, the impact will fall in a single month.”

However, he admitted that the rise would burden consumers, who were already struggling with the constantly increasing power tariff amid economic slowdown, inflation, and job losses.