Unaffordable electricity

There is also need to bring some semblance of stability to prices

The government’s decision to round out the year with yet another power tariff hike shows just how long we have to go before power theft and circular debt issues are resolved. The fresh increase of Rs1.15 per unit comes on top of other recent increases in the prices of electricity as well as gas — which the government says is necessary to address the circular debt problem, but is making utilities unaffordable for many people.

There is also a need to bring some semblance of stability to prices. Instead of consistency for a quarter, or even a couple of months at this point, we are seeing multiple hikes every few weeks on account of different things. Meanwhile, despite ostensibly being ‘variable’, power prices almost always move in only one direction due to the debt crisis. If regulators are not going to pass on savings due to lower input costs, the least they can do is reduce the frequency of price hikes, thus allowing consumers to go at least a few months without having to worry about another price hike. The National Electric Power Regulatory Authority, distribution companies, bureaucrats and politicians share responsibility for the mismanagement that has gotten us here.

An example in the context is how “positive quarterly adjustments of Rs22.297 billion” will be collected from K-Electric consumers “on account of variations” in areas such as line losses, higher management costs and other expenses. Most of the costs listed are due to inefficiencies caused by bad management and other issues attributable to the government and companies, but instead of fixing problems and reducing costs, honest consumers are being bled dry to cover the wasteful expenses. This is not to say that increasing revenue and reducing line losses is not necessary, but a better approach would be to also address the systemic problems in company structures that allow mismanagement and inefficiency to run rampant for decades without anyone feeling any pressure to correct them.

Published in The Express Tribune, December 23^rd, 2023.

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