By Sardar Khan Niazi
The staggering increase in electricity charges has had a catastrophic impact on an overwhelming majority of Pakistanis.
It has certainly proved to be a social and economic disaster; pushing a few million people further down the poverty line, reducing the middle class and increasing the lower middle, hiking the crime rate, and deepening social chaos.
The government may not benefit either, as electricity theft will go up substantially, if not correspondingly, neutralizing the intended impact. Along with theft, corruption would add up significantly.
These kinds of burdens would quickly turn into an existential challenge that the majority could not meet. Add similar pressures from two other sources, that is to say, oil and gas prices and the fears of social chaos would assume a tragic proportion.
The decision has proved detrimental to the industries due to the high cost of doing business and has opened the floodgates of inflation. In addition to making the electricity bills costlier and unaffordable for the consumers, the hike in base tariff has escalated the prices of all household goods being widely used in every household.
The electricity price increase has given a surge to multi-pronged and multiplying tragedy. Shopkeepers are paying more bills and are asking for higher rates. Hotel owners now pay additional bills and add them to customers’ charges.
People are suffering, and their sufferings are permanent fodder for the media to lament on a daily basis. Even with the kind of governance the country is experiencing, everyone knows well the actual impact of the increase and what is being passed on to hapless consumers,
The most lamentable part of this hike is that it was avoidable. Had successive governments been able to improve their bill recovery over the last few years, they could have reduced sectoral losses and escaped lenders’ pressures for increasing the price of power.
The recoveries are stuck at 90pc of the billed amount, and the unrecovered 10pc meant Rs150 billion a year. Add another Rs300bn lost to theft and the sector loses its commercial viability.
The tragedy has been unfolding that we, as a nation, have not been able to check. Instead of improving efficiency, we have always depended on tariff increase, which quickly loses their utility, as recoveries drop and theft increases, bringing the sector back to square one.
With the new hike in the power tariff, the price of a unit has moved upwards. The decision of the National Electric Power Regulatory Authority (NEPRA) to increase electricity tariffs has shifted the burden of power theft, mismanagement, and inefficiencies to consumers on the pretext of fuel adjustment.
The NEPRA on the other hand has increased the electricity rates mainly because of fuel prices, capacity cost payments, and the impact of rupee devaluation against the US dollar. This is the highest average tariff rate for power consumers.
The constant increase in power tariffs on the pretext of fuel adjustment has increased electricity prices and added to the already high cost of trade and industry. Domestic industries need comparable energy tariffs in order to capture the global market.
Due to high electricity rates, power theft is becoming rampant, as the tariff is unaffordable to consumers. We need business-friendly policies similar to those adopted by other neighboring countries in the region. Providing affordable electricity would assist in lowering production costs, thereby benefiting the public.
The recent increase in fuel and electricity rates will add to the miseries of the businesspersons, who are already feeling the heat of roaring inflation. The increase in fuel prices and tariff rates has also brought about another flood of inflation in Pakistan as it has considerably increased the cost of doing business in the country.
