CONTRARY to the repeated claims of the government, two reports appearing in media indicate consumers would not get relief as the authorities propose to utilize the gains from the recently concluded agreement with the Independent Power Producers (IPPs) to address the challenge of circular debt and there would be upward revision in the prices of petroleum products, which are already on the higher side in Pakistan because of heavy taxation.
The power tariff in Pakistan is one of the major obstacles to economic growth and, therefore, people welcomed signing of a deal between the government and the IPPs envisaging, among other things, reduction in the rate of return on equity and late payment surcharge (LPS), and sharing of savings on account of plant efficiencies. The re-negotiation of contracts with IPPs was dubbed as a major breakthrough and Prime Minister Imran Khan, in a tweet, had congratulated the nation on the development saying that this will bring down the cost of power generation and reduce the circular debt. However, media reports say the tariff of private power houses will be sliced but the sale tariff for end consumers will not change, as the Power Division wants to use the gains to be achieved from reduction in the IPPs tariff to cope up with the circular debt that has jacked up to over Rs2.2 trillion. Power tariff in the country has become unsustainable as it has not only disturbed budgets of families but also increased the input cost rendering our exports uncompetitive. Frequent increases in cost of production are mainly to be blamed for loss of exports despite massive devaluation of rupee, a move that has multiplied national debt and woes of the people. We, therefore, hope that the Prime Minister, who has to take the final decision whether or not to pass on the benefit to the end consumer would keep implications of the higher tariff in view while making a choice. Similarly, the recommendation of Oil and Gas Regulatory Authority (OGRA) to jack up prices of petroleum products from September 1 would also complicate things for the common man and the national economy and the government will have to adopt a realistic approach in the backdrop of need for incentives to boost economic activities that remained suspended due to Covid-19.
