JI protest and power price

The government's recent announcement regarding reductions in power prices has been universally welcomed, but whether or not it can actually be followed up on is far less certain. The announcement is part of a deal to appease the Jamaat-e-Islami, which has since called off its planned protest in the capital against skyrocketing electricity prices.

However, many experts have noted that the government's hands are tied by factors beyond its control - power prices are still heavily dependent on external factors, and the broader loan deal with the International Monetary Fund requires Pakistan to reduce debt, meaning that the tariff must also be kept at levels that can pay down or at least stabilise debt. The JI and other political parties are fully aware of this problem, which is why, despite a chorus of complaints, nobody seems to have any practical alternative solutions.

As things stand, the solutions include hoping for reduced energy prices in international markets, stabilisation of the rupee, and renegotiation of the contracts with independent power producers (IPP). Opposition parties have been quick to pounce on the IPP contracts as they are arguably the fastest and most achievable end. The government already had plans to review older IPP deals, many of which are about 30 years old. Energy Minister Awais Leghari has also said contracts with about 15 companies are on the chopping block.

The proposed revision of the policy for consumers exceeding 201 units of electricity and introducing special slabs with a reduced rate demonstrates another area where the government is pushing its luck. While the move will help some consumers a bit, the loss of revenue will have to be made up from other consumers, ranging from those who live in mansions to those who are a hair over the limit.

While the new national task force on electricity reforms, recently established by the Prime Minister, will be hoping to further reduce the impact of any cost increases alongside investigating avenues for cuts, it is crucial for the government to ensure transparent and effective implementation of any relief measures, or even further price increases for that matter, because a large part of the animus directed at Islamabad stems from the seemingly haphazard manner in which recent increases have been announced, and lack of clarity on the justification for their timing.

One solution could be providing more elaborate breakdowns of where cash is going and what part of the equation necessitated a price change. Transparent communication may not necessarily make increases more palatable, but it would reduce conspiratorial pushback while improving consumer confidence and trust.