Power tariff deferral

After a relentless period of raising power prices, the government has given lifeline electricity consumers a temporary reprieve from the latest hike. For the next three months, consumers of less than 200 units per month will get a subsidy of up to Rs7 per unit. The government emphasised that the benefit covers about 94% of total consumers.

While the subsidy is welcome, it is not a real solution, as it only kicks the problem up the road. By the prime minister’s own admission, money for the subsidy has been rerouted from the development budget, which means even less expenditure on long-term beneficial infrastructure and services. Meanwhile, three months is not a very long time. The poor will still be unable to pay the new tariffs after the subsidy expires. Also, just like the plan to increase tax revenues by assaulting salaried individuals, the recent electricity tariff hikes are anti-poor and middle-class and are farcical for anyone familiar with the problems of the power sector.

Blaming the IMF is the easy way out. The fund’s real concern is power sector losses and debt, not the tariff itself. What the government should be doing is aggressively pursuing power defaulters, especially wealthier ones. Unfortunately, since many rich defaulters also walk in, or adjacent to, the corridors of power, the government always chooses the easier path and then tries to convince us that it made a tough decision. Direct and indirect subsidies for several industries also need to be examined. Supporting uncompetitive and inefficient industries — and their owners — at the expense of poor people is wrong on several levels.

Pakistan’s problems certainly require radical reforms of surgical precision. Unfortunately, most of what we are getting is plastic surgery. Empty promises of erasing the debt need to be replaced by honest solutions to control and grow past it. If the government can’t freeze power tariffs, the least it could do is reduce the frequency of increases and urgently reform the power purchasing and pricing regime, which is nothing short of ridiculous.