Cutting the power tariff

The cut in power tariffs is a benefit the industrial sector needs to pass on to the rest of the country

When any action of the government is hailed, it should also yield positive, long-lasting results. In its latest bid to give the economy a boost, the prime minister has announced that the power tariff for the industrial sector will be cut by an average of Rs3 per unit. The announcement comes after various mills and chambers had expressed their concerns over the rising cost of doing business even with oil prices having slumped by around 70 per cent. Low tax revenues, power outages and the increased costs incurred on combating terrorism have left Pakistan with high expenditures and perhaps, the government could be forgiven for prioritising security in the last few years. Most segments of the economy have had to pitch in as the government took action against militants, but results have now started to show. As the country moves towards a slightly more secure era, the authorities are looking at measures that would make local businesses more competitive.

But is there a comprehensive plan to promote the economy, or is the government only looking to appease segments that make the most noise? The cut in power tariffs for the industrial sector comes after the government conceded to traders’ demands over the withholding tax issue. While the latest move will bring down the cost of doing business, will it also make industry realise that this isn’t just a luxury they are being accorded? Rather it is a benefit the industrial sector needs to pass on to the rest of the country. Will the move increase foreign exchange revenue or will the export-oriented sectors of the economy be ready with another excuse for their poor performance? The rupee has depreciated since the start of the year, the security situation is better than before and now the power tariff has come down. Oil prices have slumped further and regulatory duty has been imposed on imports, providing local businesses with plenty of protection. It is time they work on value-addition, diversify markets and products, and become globally competitive. The world economy might be undergoing a slowdown, but it will soon pick up. Pakistan needs to join the race.

Published in The Express Tribune, December 30^th, 2015.

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