Pakistan Reader# 659, 29 August 2023
Femy Francis
On 28 August, protestors took to the roads of Khyber Pakhtunkhwa against the exorbitant electricity prices following similar protests in Karachi, Lahore, Peshawar, Multan, and Islamabad for the last four days. The protest began when the National Electricity Power Regulatory Authority (NEPRA) pushed the tariffs by PKR 4.96 per unit as it was a condition demanded by the International Monetary Fund (IMF) to approve the USD 3 billion bailout program. Owing to this there has been a surge in the cost of electricity with the civilians of Pakistan and the business communities refusing to pay the unrealistic prices to be incurred by them.
Grievances and Protest
Citizens have taken to the streets with traders and business communities refusing to abide by the excessive electricity costs. On 28 August, the Balakot community and Hyderabad’s Chambers of Commerce announced a shutter down strike. Angered consumers of Rawalpindi gathered around Islamabad Electric Supply Company (IESCO) where 500 police officers were stationed to handle the mob. President of Tanzeem-e-Tajran Pakistan, a trader’s association Muhammad Kashif Chaudhry said: “We had already warned the rulers of this country not to become a tool of the international financial institutions by implementing anti-people policies.” Hundreds of protestors from women to children in Rawalpindi gathering at the grid station in Bakra Mandi torched their electricity bills in protest.
Redressal and proposal for relief
Amid the heightened protests Interim Prime Minister Anwaar-ul-Haq Kakar held an emergency meeting to address the issue at hand to provide initiative for immediate relief. On 28 August, Interim Information Minister Murtaza Solangi stated that real relief is close as the Energy Ministry is finalizing the redressal proposal. An anonymous source informed Dawn of the likely initiatives that might be brought into action where the bills can be paid in installments of more than two times, with some of the higher bill amounts being adjusted to the winter months when there is a lower power consumption. Additionally, they plan to remove the free electricity initiative for the Water and Power Development Authority (Wapda) and seek the Ministry of Finance's advice on how the tax imposed can be reduced without violating the IMF conditions.
Other reasons for the surge in electricity cost
The country grappling with inflation as the Pakistan Rupee devalues to PKR 300 has led to stunted consumer purchasing power. An editorial in The Friday Times outlines several other reasons for the surge in price:
First, Consumers shouldering capacity charges of IPPs. Independent Powe Producers (IPPs) signed with the government are entitled to get minimum payment if the power generation falls below a certain level owing to lack of demand. Between April and June 2023, the capacity charges reached PKR 124 billion and the consumers are now facing the additional costs.
Second, Outdated infrastructure, transmission and electricity theft. Senate Standing Committee on Energy reported that a staggering amount of PKR 467 billion was lost owing to theft, line losses and defaulters. The committee stated that the burden of it is faced by the consumers as a whole as there are no regulatory checks.
Third, the energy costs are also linked to the cost of the fuel that is used to generate electricity which is primarily imported, With the rising costs of imported fuel the brunt is faced with heightened electricity costs.
Fourth, In a circular debt of financial liabilities in the power industry. All of these reasons combined with the economic turbulence and inflation have added to the overall rise in cost. As Pakistan Credit Rating Agency stated, “long-standing deficiencies in terms of delayed tariff adjustments, unbudgeted subsidies, weak operational and administrative controls, line losses in excess of ~16% and bill collection losses in excess of 4.6% on distribution network’s part have collectively led to unsustainable levels of circular debt in the power sector.”
References
Zafar Bhutta, “Power protests refuse to die down,” The Express Tribune, 28 August 2023
Ayaz Gul, “Protests Over Power Bill Increases Spread in Pakistan,” VOA, 28 August 2023
Syed Irfan Raza, “Cabinet empowered to fix power bills mess,” Dawn, 29 August 2023
“Pakistani traders, citizens rally against soaring electricity bills, warn government of ‘consequences’,” Arab News, 26 August 2023
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