Illusory relief

Essential for Pakistan to initiate comprehensive energy sector reforms, reprioritise subsidies given to the rich

After a revised roadmap, the IMF has decided to allow Pakistan to extend the payment of electricity bills for consumers using up to 200 units over three months, pending the approval of the caretaker Prime Minister. This however comes with a trade-off — a significant increase in gas prices of up to 50% effective from July and a “full force” crackdown against electricity pilferage.

While the relief will somewhat benefit 10% or around four million consumers, it remains a drop in the ocean compared to the 81% or 32 million consumers who were initially hoping for respite through the original proposal. This is far from true relief but raises hope that the IMF is willing to budge if appropriate alternatives are presented. One must recognise that the caretaker government has been handed a daunting challenge. Balancing the need for fiscal responsibility, as heavily dictated by global lender, with the need to protect the interests of the common citizen is not an easy job to perform. However, a stark disconnect from ground realities has been evident from recent public announcements; or perhaps the caretakers have been asked to put up a front of ‘all is good and well’ while fervent protests are rampant against the bills that are impossible to pay, in many cases. Regardless, it is hoped that the remedial measures announced are implemented fairly and the crackdown does not target only certain communities or areas.

Also read IMF allows leeway on electric bills, raises gas prices by 50%

Beyond these, it is essential for Pakistan to initiate comprehensive energy sector reforms and reprioritise subsidies given to the rich. The circular debt issue, which has reached alarming levels due to the currency devaluation, must be addressed through comprehensive measures and drastic policy changes including diversifying the energy mix to reduce dependence on costly fuels and shifting towards sustainable means. If there is a time for the government to use its extraordinary powers, it is now. Apart from immediate relief, a path towards sustainability and reformation can be set before handing over the reins to an elected government.

Published in The Express Tribune, September 8^th, 2023.

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