Power tariff hike

Fears have become reality as the Ministry of Energy and Power has proposed new slabs for power consumers. Though the units for lifeline consumers have increased, the Nepra chief has warned about the second phase of hike in power tariffs. The citizens of Pakistan have been facing hardships in paying their electricity bills which have skyrocketed during the past couple of years. Now, according to reports, the IMF and the World Bank are once again pressing the country for an even more price hike in power tariffs. If these international financial institutions get their way, this new increase is likely to come in force at the beginning of 2022. One of the arm-twisting techniques used is to link IFI credits and loans with certain conditions such as power tariff hikes.

The World Bank in a recent interaction with power managers of the country is reported to have linked its credit loan worth one billion dollars for energy projects with an increase in power tariff from January 1, 2022. The same applies to the IMF which also wants Pakistan to move in that direction. While the IMF programme amounting to six billion dollars is under suspension, the Fund is said to be intent on imposing a price hike before it agrees to release its next tranche of the deal to Pakistan. The way Pakistan’s power sector has been handled recently has not been helpful with still spiraling circular debt and ever-increasing prices.

There is a need to adopt a coordinated approach in which all relevant ministries and departments handling finance, energy, and petroleum come together and develop a comprehensive and long-term strategy, rather than tackling the issue in an ad-hoc manner. The people of this country are already living in much financial misery and the government appears to be more interested in gaining political advantages rather than solving their problems. Though the government has been claiming to have scaled down the monthly flow in the circular debt in the power sector, it must ensure further reduction in this flow. The government must adopt some effective measures to curtail the growth in circular debt as in the last fiscal year as much as Rs130 billion added to the circular debt in the country. The subsidies allocated to the power division must continue despite the pressure from the IMF and WB as the country’s people simply cannot afford to pay more.