AS Jamaat-e-Islami (JI) has announced its plan to resume protests against rising prices of electricity and failure of the Government to provide relief to consumers, Minister for Energy Sardar Awais Ahmad Khan Leghari has expressed the confidence that the tariff might be reduced by Rs.12 per unit. He did not give any timeline but added that the issue of IPPs was nearing resolution, indicating something good might transpire by the end of the current month.
The concerns expressed by JI chief Hafiz Naeem-ur-Rehman reflect sentiments and aspirations of the people, who have long been protesting against the unjustifiably high electricity tariffs that have pushed millions below the poverty line as many families receive more electricity bills than their entire monthly income. Highlighting the issue of IPPs, Hafiz Naeem stressed that despite the government’s claims of resolving the crisis, the people continue to suffer. It is, however, understood that it was not possible for the Government to take any unilateral decision vis-à-vis capacity payments to IPPs because of legal complications and its impact on the overall investment environment. The Government adopted a prudent approach of holding negotiations with different IPPs for revision of the contracts and positive results are emerging due to the positive response of the IPPs. The Government has already held successful negotiations with over twenty IPPs that will result in substantial savings. It is also encouraging to hear from the Minister that the Government was also reviewing taxes on electricity bills as part of the options to lower the tariff substantially for all categories of consumers. There are a multitude of taxes on bills and their rate is also higher and as a consequence taxes surpass the basic energy cost, which is highly unfair. People are eagerly waiting for the final outcome of the ongoing processes aimed at reduction in the electricity tariffs but there is a big ‘if’ in the shape of a prior approval from the International Monetary Fund (IMF). As earlier stated by Prime Minister Shehbaz Sharif and also indicated by the Minister, the Government was in talks with the IMF to convince it that electricity tariff could be lowered by Rs10 to 12 per unit. The IMF should have no objection as a result of revision of agreements with the IPPs, the Government will be saving over Rs.1.1 trillion and the benefit must go to the end consumer. However, the IMF has, in the past, raised objections and forced the authorities concerned to withdraw or review plans and programmes to provide even temporary relief to consumers. As has been acknowledged by the Minister himself, people can no longer afford to pay exorbitant electricity bills and a revamping of the entire system is the need of the hour. The Minister has also acknowledged that uniform tariffs for the entire country was a major challenge pointing out the prevailing system of transferring the burden of one company to another was unfair. We too have been emphasizing in these columns that honest consumers and those of the efficient distribution companies must not be forced to pay for inefficiencies and corruption of other companies. The Government should seriously explore the option of introducing localized tariffs for each distribution company based on factors like losses and recoveries. The plan to launch a competitive energy market in March this year also needs thorough considerations as leaving it to the market forces to determine the energy tariff might be harmful for consumers because of the tendency of exploiting and fleecing consumers in the absence of effective monitoring mechanisms. It will also not be a prudent approach to review the need for major projects like Diamer Bhasha dam and nuclear power plants as stated by the Minister. This is because water reservoirs are deeply linked to irrigation based agri-economy and nuclear power plants are reliable contributors to the cause of energy security. Similarly, more incentives should be given for popularization of solar panels as they offer a sustainable solution to the energy woes of the people.
