It is advisable to proceed cautiously when Prime Minister Shehbaz Sharif pledges to drastically lower the exorbitant power bills in the coming days.
Mr. Sharif said on Independence Day that everyone’s top issue was the cost of electricity and that Pakistan’s exports, industry, and agriculture could not expand without lower power costs. He declared that he wanted to guarantee “maximum relief” and that the government was working around the clock to make things right. Energy Minister Awais Leghari has made similar remarks in recent weeks in response to mounting criticism from some political parties and the influential textile lobby on the government’s costly power purchase agreements with IPPs. The minister predicts electricity rates to start declining in January, not any earlier. That is the only difference. Mr. Sharif has not disclosed how he intends to perform this miracle in the upcoming days or perhaps months.
Although they are a contributing factor to the problem, the contracts with the IPPs that guarantee their local and Chinese owners enormous profits are undoubtedly problematic. Our higher-than-regional electricity prices are caused by a number of other complex issues. In response to growing criticism of the government’s expensive power purchase agreements with IPPs from some political parties and the powerful textile lobby, Energy Minister Awais Leghari has made similar statements in recent weeks. Not any sooner than January, according to the minister, is when electricity rates should begin to drop. The only distinction is that. Mr. Sharif has not revealed how he plans to carry out this miracle in the coming days or possibly weeks.
The contracts with the IPPs that assure their Chinese and local owners of massive profits are clearly problematic, even though they are a contributing component to the crisis. Many more intricate problems are the root reason of our higher-than-regional electricity prices.
Fortunately, the administration has worked with a foreign consultant to draft a “home-grown economic strategy” that will target 6% yearly growth through export-led growth and the elimination of persistent economic obstacles. The bad news is that many saw through the authorities’ apparent second-guessing of the plan when they delayed their planned announcement on Independence Day, indicating that they believed it would negatively impact the financial interests of Pakistan’s rent-seeking elite.
The unexpected postponement of the new economic reform plan’s announcement, however, does not raise red flags about the government’s objectives. As opposed to that, it prompts worries about vested interests using their power to safeguard their advantages.
