Circular debt surcharge?

The people continue to pay for decades of mismanagement on the part of elected officials and the bureaucracy. With circular debt approaching Rs1.9 trillion, the government is now moving towards imposing new surcharges on consumer and industrial electricity bills. The Power Division introduced a bill in the National Assembly for the necessary amendments to the Nepra Act so that it can meet the terms of the IMF’s $6 billion Extended Fund Facility. The new taxes — rates for which will be determined later — would supposedly help pay down the circular debt, just like the umpteen previous surcharges different governments have imposed. Some reports also suggest the government was trying to plug the legal changes into the Finance Bill but was advised against it by the Law Division because of a Supreme Court ruling barring such a move.

Complaints, however, persist that the government has already been strong-arming industrial units that successfully set up captive power plants to become self-reliant during the worst era of load-shedding. Textile mills claim the government is going ahead with the new taxes because its previous plans to make use of captive power plants unaffordably expensive had failed. This and other moves, they say, would force consumers to rely on the national grid, which is more costly, but currently has a supply surplus. The government is also trying to make it harder for companies to become independent of the national grid by forcing them to keep paying various charges to the local distributors, negating the benefits of moving to affordable captive plants.

It is indeed surprising that the government itself is pushing such uncompetitive practices, given that it is literally running public drives to keep businesses from overcharging and fleecing customers. At least the local fruit vendor gives us the right to reject his obnoxious price demands. The government is demanding the money whether consumers buy the product or not. Perhaps someone should call the Competition Commission, which has not issued a ruling on any government monopolies in over a decade. 

Published in The Express Tribune, June 21^st, 2020.

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