Reduction in power tariff

It is time the government work towards resolving the issues facing the power distribution network

Pakistani consumers are likely to now reap benefits of the decline in global oil prices, which have come down more than 40 per cent in recent months. There is likely to be a cut in the power tariff by Rs2.45 per unit for the month of November. Nepra is set to announce this reduction, on account of fuel adjustment, that would give some relief to domestic consumers, as well as to industries running on furnace oil. The lowered power tariff will decrease the cost of production of industries, which would be hugely welcomed after months of load-shedding hindered growth as well as plans of expansion.



The cut in power tariff, however, needs to be translated into overall relief for consumers as well. Following the decline in global oil prices, little change has occurred in the overall prices of essential commodities. While the government may want to take credit for this power tariff reduction, it cannot be completely credited to it or to the efficient use of power plants. If the cost of production has gone down, the very nature of the development means that power plants would be able to produce more for a certain amount of input. While the government can claim to have given some relief to the people, its real job would be to implement this change across all sectors and ensure that prices of other commodities are brought down as well. The decline in oil prices and Nepra’s fuel adjustment is a relationship that will continue but it is the government’s responsibility to help translate this to more sectors. Often, the cut in power tariff or decline in oil prices is not accompanied with a subsequent decrease in prices of other items. What could be a lagged effect is not implemented at all. Transport associations look towards higher margins, while the government ignores their shenanigans.

With the oil import bill going down, maybe it is time the government also worked towards resolving the issues facing the power distribution network and ensure it has the capability to bear the enhanced capacity the authorities so wish to add. This would be a good time to work on areas that have, so far, been neglected.

Published in The Express Tribune, December 13^th,  2014.

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