ast week, Prime Minister Shahbaz Sharif announced a schedule of reduction in electricity prices for select categories of consumers. Speaking at an event organised for the announcement, the prime minister said the government had decided to reduce the electricity tariff by an average of Rs 7.41 per unit for domestic conusmers. The prime minister also announced a reduction of Rs 7.59 per unit for industrial consumers.

The reduction appears to be substantial but if you peel back the layers, you realise a lack of systemic reform. The relief package does not amount to a flat tariff cut; it is a collection of temporary adjustments — fuel cost tweaks, quarterly rebates and subsidy, all within the regulatory setup.

The relief is promised for April to June. The base tariff has not changed and surcharges and taxes remain in force.

It is important to note where the money is coming from. A part of it is coming from the higher petroleum product levies and a part from additional charges on captive gas use.

The power sector circular debt has ballooned past Rs 2.4 trillion. Distribution companies keep leaking power and cash. Capacity payments to idle power plants keep burning holes in our budget. Has any of that changed?

Meanwhile, the power sector circular debt has ballooned past Rs 2.4 trillion. Distribution companies keep leaking power and cash. Capacity payments to idle power plants keep burning holes in our budget. Has any of that changed?

Let us not forget the IMF’s take on this. Their prescription is prices that reflect actual costs and a phasing out of subsidies. The short-term relief might not sit well with that approach.

Small manufacturers and exporters are not impressed [says who?]. They have seen similar flash-in-the-pan moves before. They need and will better appreciate stability and a reform plan.

This is not just about money. It is also about how we think. If we make electricity cheaper without fixing the supply side, the demand spikes. When that happens, load shedding follows. Not many consumers will see that as relief.

Once the reality sinks in, more disappointment will follow.

It can be argued that the petroleum levy hits the poor the hardest. When a rickshaw driver pays more for fuel, the passenger they are carrying has to foot the bill.

Effective reform requires taking politics out of power pricing. The NEPRA should be allowed to do that without interference from the government. Subsidies, where needed should be targeted.

We also need greater clarity about our energy future. Demand-side management, renewable sources, smart meters and loss reduction are necessary.

The writer is a chartered accountant and a business analyst