Power price boulder

The inevitable has happened. The power tariff has been jacked up by almost 20 per cent, imposing an unbearable additional burden on hundreds of thousands of households and businesses already struggling to stay afloat. This is a punishing drag on an economy already panting for breath. Not that it was a bolt from the blue – the move has been on cards ever since the authorities signed up for a $3 billion Stand-By Arrangement (SBA) with the IMF. That Prime Minister Shehbaz Sharif’s government was forced to enact it now even as it prepares to step down in preparation for a general election is a dead giveaway there was no wiggling out of it. It had to be done – although it will further raise the cost of living and of doing business, kill jobs, arrest growth, and promote a general sense of desolation in the society ahead of a crucial general election.

Sharif and his colleagues must be thinking where they went wrong to deserve this. The answer to that is not difficult to come by: finding new revenue streams. However, embracing this answer was indeed beyond the reach of this short-lived coalition government, which is a crying shame really. So much could have been done to obviate the need for this power tariff hike, but the government neither cared nor could be bothered. A windfall tax on banks that raked in from the rupee meltdown was mooted and dropped, as was a scheme to make the freewheeling real-estate sector cough up dregs of their earnings for the public exchequer. The government briefly seemed intent on imposing a fixed tax on retailers as a first step towards bringing this unruly sector of the economy under the tax net, but then retreated. Nor could it find it in its heart to deny fat subsidies to textile barons. All these lost opportunities of revenue collection, all these avoidable expenses had to have a cost to the nation – and the PDM. The upshot is that here we are, convincing ourselves this bitter pill was necessary for the health of our flagging energy sector and therefore the economy, which nevertheless has a grain of truth to it inasmuch as there could be no otherwise.

We have to own up that our foremost compulsion to raise power tariff stems from the poor shape of our economy. We raise barely enough revenue to meet our debt service obligations. If we did not need IMF help to stay solvent on external debt service, the Fund would have no business telling us to take urgent steps to guard our energy sector from failing. A mere look at the affairs of the power sector is enough to bring home the point that we are paying the price of bad management. How can public-sector entities running up huge arrears with the power utilities be justified?

On reflection, the situation begs a question: How come raising power tariff – roiling up almost every last common Pakistani – is politically less expensive than taxing this or that small subset of the privileged class? The irony of the situation is that the privileged class has practically free access to power supply – and it is not just government officials and judges. Whole industries, whole cities are freeloading on the national grid for free. It is the hapless regular Pakistani citizen who must pay to keep electricity flowing – so strap them with this additional burden too. But the authorities would do well to remember that their blind reliance on the cohesion and resilience of our social fabric increasingly verges on the reckless. Most Pakistanis alive have never seen this level of economic hardship, and strapping them with further burden can backfire one day. Let us hope this particular hike does not prove to be the proverbial last straw that broke the camel’s back – though this one is more like a boulder than a straw.