Pakistanis Dejected With Increase in Power & Fuel Tariffs

The present government has already imposed an additional burden of over Rs. 450 billion on the power consumers and with the imposition of another 200, the total burden on the people will reach Rs. 650 to 700 billion, leaving Pakistanis unhappy with the increase in power and fuel tariffs.

Petrol prices have surged twice in January only, the petrol prices increased by Rs2.75 per liter on 1st January.

The government again increased the price of petrol for the second time in one month by Rs3.20 which was effective from January 16, 2021.

The Finance Division announced a hike of Rs3.20 per liter in the price of petrol and an increase of Rs2.95 per liter for high-speed diesel.

Federal Minister for Energy Omar Ayub on Thursday announced to increase the per-unit cost of electricity by Rs 1.95, adding that the government has paid Rs 473 billion subsidies to the power sector during the last year despite the economic crunch.

Due to the rise in electricity rates all electricity consumers will have to pay at least Rs 200 billion more.

The present government has already imposed an additional burden of over Rs. 450 billion on the power consumers and with the imposition of another 200, the total burden on the people will reach Rs. 650 to 700 billion.

After the increase, the basic electricity tariff will be Rs 15.30 per unit, which was Rs 9.50 in August 2018 when the PTI government came to power.

People from various walks of life have rejected the around Rs2 per unit increase in the electricity tariff, urging the government to immediately withdraw the decision.

They said the hike in power tariff may jack up the prices of almost all other products and commodities.

They termed the decision unwise, especially at a time when people were already living under a lot of burdens due to price hikes, increasing unemployment and cost of doing business, etc.

All Pakistan Wapda Hydro Electric Union Secretary-General Khursheed Ahmad appealed to the prime minister to withdraw the recent increase in power tariff.

Addressing a press conference at the Labour Hall, he said the annual capacity payment of independent private powerhouses had risen from Rs185bn in 2013 to Rs860bn in 2020, which is likely to reach around Rs1.5 trillion in 2023. He urged to take effective legal measures to prevent electricity theft and protect Disco employees against the thieves.

Why did the government increase electricity rates?

Special Assistant to the Prime Minister for Energy Tabish Gohar told News360 the increase was implemented because of the government’s heavy spending on Covid-19, which prevented it from giving a further subsidy to people.

Tabish Gohar also said that electricity distribution companies were trying to reduce losses. The country’s four electricity distribution companies account for 85% of electricity losses. These include Hyderabad Electric Supply Company (HESCO), Sukkur Electric Supply Company (SEPCO), Quetta Electric Supply Company (Casco), and Peshawar Electric Supply Company (PESCO).

What is the role of IMF in raising electricity rates?

Finance Ministry sources told News360 that the government is part of the IMF program and the IMF is constantly putting pressure on Pakistan to meet the targets of the Financial Action Task Force (FATF) and reduce power losses.

Pakistan has not made progress on many of the IMF’s goals, so its program is practically suspended. Now Pakistan needs more loan installments approved from the IMF, it has been decided to reduce electricity losses and that is why it has been decided to increase the collection in the power sector by increasing the rate.

Mirza Abdul Rehman, the country’s leading industrialist and coordinator of the Federation of Chambers of Commerce and Industry, told News 360 that raising electricity rates would increase the cost of production for industries leading to a rise in the inflation rate.

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