PM moves to ease burden on power consumers

Relief package in the works to alleviate burden on low-income citizens despite serious odds

ISLAMABAD:

The caretaker government is displaying genuine concern over the plight of the majority of Pakistani citizens, who are grappling with the unaffordable rise in electricity bills.

Stepping up to the challenge, interim Prime Minister Anwaarul Haq Kakar has issued clear directives to tackle this issue promptly, despite the obstacles posed by the country's heavy reliance on imported oil and the towering burden on the national exchequer due to fluctuating dollar rates needed for imports, capacity payments to IPPs, and IMF conditionalities.

In the latest developments, some kind of relief package is being worked out so that the vulnerable classes of hard-working, low-income people are not made to suffer further as a sequel to the faulty policies of the PTI government.

The caretaker government is making every effort to mitigate the negative consequences brought about by the neglect and policy U-turns of the PTI regime, which have only exacerbated the challenges presented by the stringent conditionalities imposed by the IMF.

However, the task is uphill with indomitable challenges staring us in the face, viz. market-determined rates or free-floating of dollars.

Experts in the know of things are of the considered opinion that the basic causes of the phenomenal rise in electricity bills, inter alia, are (a) the terms and conditions agreed upon with IMF by the PTI government and (b) grant of economic autonomy to State Bank of Pakistan (SBP) around the same time. Now, the situation is such that the rate of the dollar is determined in the open market.

Due to these key steps taken by the PTI government, the Government of Pakistan now wields limited control over SBP. And, if the government intervenes to regulate the dollar rate, then the result would be a piling up of burden on our foreign exchange reserves which are already shrinking drastically.

Of course, it is a vicious, rather ominous- cycle since the production of a large chunk of electricity depends on the import of furnace oil, diesel, coal and other types of imported fuel from abroad. All these imports are paid in dollars whose rate is determined by the market leading to a sharp decline in our national economy.

The caretaker government is fully cognizant of these two pivotal factors that have their roots in IMF conditionalities. Therefore, full attention is being given to drastic reduction in line losses-cum-power pilferage as well as in the supply of free electricity to many a privileged elite in addition to putting the alternate energy projects on a fast track although this track of alternate energy generation has kicked off recently at a conspicuous, organised scale.

A solar energy project was recently launched by the coalition government of Shehbaz Sharif for adding 10,000 megawatts of electricity to the national grid and work is still continuing on this important project but the results may take some more time.

Likewise, the issue of capacity payments in dollars to private electricity producers whether they meet their electricity generation targets or not, properly and according to the set timelines, is also creating lots of difficulties.

Power pilferage is yet another problem that is usually camouflaged with an incomprehensible term ‘line losses’.

This situation brings misery to the lives of honest energy consumers who have to bear the brunt of dishonest energy consumers involved in power pilferage, most often with the complicity of distribution companies’ staff. Due to these reasons, the cost borne on power generation is not fully recovered resulting in a massive increase in the deficit of the electricity sector, as usually explained by the term ‘circular debt’.

Another intriguing aspect is that 75 per cent of power is consumed by households. Had a major portion of the generated electricity been consumed by industries and commercial enterprises, it would have contributed a lot towards economic growth. The end result is that excessive use of electric power by the households increases the ordinary people’s expenditures thus leading to mass unrest.

Against this backdrop, individual consumers need to exercise restraint in the use of electricity just in the pattern of advanced countries where most of the activities are undertaken during the daytime, obviously with a focus on conserving energy. This austerity must be followed at least till the country is able to generate more power through alternate means.

Another proposal that is being contemplated, is that the Discos (Electricity Distribution Companies) should be privatised, following in the footsteps of the privatisation of PTCL and TIP which has worked well and yielded fruitful results, meaning more facilitation for the common man.

Prior to PTCL’s and TIP’s privatization, it was an uphill task getting a phone connection but following the privatisation and inclusion of more companies and investors in this sector from all over the world, getting a phone connection did not remain a difficult task and, moreover, the prices and tariff reduced substantially.

In keeping with this approach, privatisation of the energy sector is the need of the hour as it would bring about competition resulting in relief to the genuine consumers and end to line losses and power pilferage.