Electricity bills have become agonising for everyone, prompting widespread outcry from various segments of society. There are growing appeals to government for urgent course correction. Adding his voice to chorus of concern, PML-N President and former Prime Minister Nawaz Sharif also voiced serious worries about skyrocketing electricity tariffs at a high-level meeting in Lahore on Saturday, labelling it as significant burden on all citizens and not just the poor.
As a senior and experienced leader, the former prime minister indeed cannot ignore problems faced by the masses, even with his own party in power. The public has great expectations from him to take necessary actions to provide some relief. The root cause of current electricity crisis lies in contracts signed with Independent Power Producers (IPPs) over various periods.
These contracts were often made without careful consideration of their long-term consequences. As a result, energy users now receive some of the worst electricity invoices globally, with taxes and capacity fees accounting for a staggering 70 percent of their bills. This situation has led to enormous financial losses for the country, estimated at nearly Rs5,082 billion over past 15 years. The Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI), along with other trade and industry leaders, has underscored critical importance of cancelling all agreements with IPPs and procuring electricity from cheaper sources without any capacity charges.
They have demanded a reduced electricity tariff of 9 cents per unit for survival of the industry. The current state of affairs, where total installed production capacity is 45,000 megawatts but only 22,000MW are being utilised, further exacerbates the crisis. The cost of a unit of electricity for industrial consumers is Rs35 without tax, rising to Rs60 after tax. Notably, approximately Rs18 per unit is paid in capacity charges for electricity that is not even used, pushing the economy towards destruction.
While there is a pressing need to renegotiate contracts with IPPs to bring relief in electricity prices, government cannot unilaterally act against these agreements due to guarantees involved. The cost of cancelling these contracts is a significant concern, and it remains uncertain whether government can afford it.
Therefore, a more viable solution would be for the government to sit with IPPs and renegotiate the contracts to achieve a more sustainable outcome. Concurrently, efforts to produce electricity from renewable energy sources should be accelerated. In this context, Punjab government’s plan to expand solar panel financing scheme is a welcome step. The scheme, known as Roshan Gharana, aims to provide free or loan-based solar systems to the public and expected to be launched on August 14.
This initiative must be implemented with full speed and transparency to ensure its success and provide much-needed relief to the public. Government must come up with out-of-the-box solutions to rein in soaring electricity prices. This is not only crucial for economic stability but also for maintaining social harmony, as public emotions and resentment continue to rise due to abnormally high electricity rates. Immediate and effective action is need of the hour to alleviate suffering of the people.
