A belated relief

The relief gesture from the government on fuel adjustment charges has not come well with the consumers. Rather, it is a tale of confusion as it will come into effect only from September bills. Secondly, the fact that electricity consumers will have to bear the toil for July to September bills is an untenable cost. The decision to exempt the recently announced fuel adjustment charges came after countrywide protests. But here too the government opted for a barometer that consumers under 200 units will not have to pay FAC, which will cost the national exchequer Rs22 billion. The argument is that it was unavoidable as high fuel prices in the international market in June compelled it to pass on the buck.

Other concessions that came at a moment of crisscross were that agricultural electricity users were also exempted from the FAC charges. This means around 17 million consumers are off the FAC, primarily hailing from the low-income strata. The question and the worry is that this would not be a permanent relief, as more fuel surcharges and tariff raise is around the corner if the deal struck with the IMF is any criterion. The dispensation is already mulling to further raise oil prices, irrespective of the fact that the black-gold cost is dropping in the international market.

The promise to roll back fixed tax on traders with some modifications from October is another piecemeal offer. Whether or not it will come as a relief — and in what pace of time — is anybody’s guess. The issue is that purchasing power of the commoners is at rock bottom, and production units are suffering due to high cost of energy and subsequent inflation. It desires an effort no less than surgery to ward off the rejectionist mood and usher in new confidence in the economy.

The government must opt for a complete review of its energy tariff as well as taxes and surcharges on oil and gas. It’s time to cut the expenditure on the auxiliary and luxury turf, and transfer funds for rehabilitating the production sections. Pakistan has a vibrant 58% services sector that depends on direct consumers on a day to day basis, and is shock-conscious to spiral in energy prices. It’s high time the relief was considerable and long-lasting. Keeping the wheel of the economy moving and generating employment is the way to go.

Published in The Express Tribune, August 26^th, 2022.

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