Power price hike

The balance the government was trying to achieve has been squashed by IMF’s perfunctory nod of disapproval

Citizens must yet again brace themselves for more bad news. IMF’s disapproval of the new budget proposals has urged ECC to increase power tariff by Rs7.91 per unit in an attempt to recover Rs892 billion from consumers. Moreover, with subsidies removed the cumulative jump in prices will amount to Rs12.91 per unit — a whopping 108% increase. This alone would extract Rs1.45 trillion from consumers every year in a bid to pay back international debt.

With IMF calling the shots and the threat of Pakistan defaulting persisting, no government or economic expert can undo the consequences of a past filled with corruption, lavish spending and poor economic decisions. The balance that the current government was trying to achieve in the budget has been squashed by IMF’s perfunctory nod of disapproval. Citizens were already reeling from heavy waves of inflation and high taxation that have stagnated growth in many sectors but the collective increase in fuel and electricity prices seems to be the final nail in the coffin. It will indeed spell doom for the many industries and small-scale businesses. Not only is Pakistan suffering from a shortfall in electricity production that leads to excruciatingly long hours of load-shedding, but the cost of electricity has sky-rocketed to a point where and lower-middle class families have requested to pay in installments. But there might be a way of out this hellish situation. If the government doesn’t have the tenacity to negotiate with IMF, a suitable alternative would be to shift to solar energy production.

The government has taken a step in this direction by removing 17% GST on solar panels in the new budget, but it needs to attend to the issue in a properly worked-out way. Projects like the Quaid-e-Azam Solar Park, which has the capacity of producing around 100MW of electricity, need to be rejuvenated. Even though the project was not as successful due to Bahawalpur’s desert terrain and high dust count, it still remains an untapped potential that can be shifted or mimicked in another adequate location.

 

Published in The Express Tribune, June 16^th, 2022.

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