As the country grapples with a massive electricity tariff hike, the business community is demanding an end to the facility of free power units in Pakistan. They argue that this move could potentially lead to annual savings of billions of rupees.
The Pakistan Business Forum (PBF) has urged the federal government to discontinue the provision of free or discounted electricity to government officers, including staff of all power distribution companies (discos), which could save the national exchequer Rs10 billion annually.
PBF, Chief Organiser and Vice President, Chaudhry Ahmad Jawad emphasised that the days of providing free electricity to certain individuals should come to an end, especially when the country is facing economic crises. Zulfikar Thaver, President of Union of Small and Medium Enterprises (UNISAME), echoed this sentiment, stating that it is unfair to allow free electricity to anyone, as it burdens those who have to pay for it.
The recent significant increase in the base tariff by Rs7.50 per unit for electricity, , resulting in rates of Rs42 per unit during peak hours and Rs36 per unit during off-peak hours, particularly affecting Time of Use (TOU) meter consumers, has caused dissatisfaction among various business, industry, and trade entities in Pakistan.
Federation of Pakistan Chambers of Commerce & Industry President, Irfan Iqbal Sheikh called the hike anti-business and expressed concern about the added burden on already uncompetitive businesses in the region.
The tariff increase is not limited to middle-class consumers but also affects high-end consumers, commercial consumers, and industrial consumers using 400 units or more per month, said PBF Vice President Jahanara Wattoo. She pointed out that this spike in commercial tariffs will range from Rs35.38 to Rs41.35 per unit, while the industrial consumers’ tariff will rise to Rs32-38 per unit, excluding additional charges.
The consistent electricity tariff hikes have significantly increased the cost of industrial production, leading to inflation and hardships for the poor in the country. PBF officials stressed that instead of burdening consumers with higher tariffs, the government should focus on curbing electricity theft and controlling line losses to generate revenues.
Despite the recommendations of the International Monetary Fund (IMF) Stand-By Agreement, the PBF questions why the government has not taken measures to reduce line losses in discos to zero percent within six months, as it could be achieved with proper enforcement.
The recent tariff hike will not only make electricity bills costlier and unaffordable for consumers but also escalate the prices of household goods widely used in every household, further impacting the competitiveness of finished goods in international markets.
The business community remains concerned about the implications of these increases on industrial production and inflation, emphasising the need for sustainable solutions and measures to support the country’s economy during these challenging times.
Published in The Express Tribune, July 27th, 2023.
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