 "Sticker Shock: Why power bills in Pakistan are out of control")
Pakistan is facing a sticker shock. People have taken to the streets to protest the sky-high electricity bills across the country, while the caretaker government is considering different ways in which to bring the tariff down – and quickly. But what is happening in Pakistan? And why? And what steps is the government taking? Let’s take a closer look: What is happening? As per Indian Express, major protests have erupted in major cities including Rawalpindi, Peshawar, Karachi, Lahore and Multan. Roads have been blocked, tyres burned and slogans raised against the caretaker government for days
#Pakistan Protests are being held against heavy electricity bills in major cities and towns of the country. After the hefty increase in electricity prices across the country, heavy bills and taxes have forced the people to take to the streets. pic.twitter.com/g4JnWEMyaq
— Ghulam Abbas Shah (@ghulamabbasshah) August 25, 2023
As per The Times of India, people have publicly set fire to their bills and even faced off with power company officials. One company even ordered its officials to remove government license plates from their cars, as per the report. As per ARY News, some took to social media to claim that the electricity bills sent exceeded even their monthly salaries. The public, traders and businessmen alike have proclaimed that they cannot bear the exorbitant cost of electricity and announced that they will not pay their bills.
Trade unions have claimed that the soaring cost of electricity will force many businesses to shutter.
In Balakot, the business community on Monday rejected the recent increase in electricity bills and announced a shutdown strike. The community, under the banner of Anjuman Tajran, took to the streets and demanded immediate action to reduce their economic pain, _The Express Tribune r_eported. The chamber of commerce in Hyderabad announced a shutter-down strike. Businesses also remained closed in Mansehra after a union of traders called for a complete shutdown of all business centres in the city, the report said. Meanwhile, a complete shutdown was witnessed in Pind Dadan Khan. People in Rawalpindi surrounded the Islamabad Electric Supply Company (IESCO) grid station and set fire to their electricity bills, The Express Tribune reported. As per India Today, demonstrators also surrounded the Gujranwala Electric Power Company’s office. Senators voiced concerns regarding the electricity situation in Pakistan and highlighted the sufferings of the people due to theft, line losses, and defaulters. Meanwhile, the Jamaat-i-Islami (JI) has called a nationwide strike on 2 September, as per Indian Express. Why is this happening? Electricity bills have spiked after the crisis-hit nation agreed to increase its power tariffs in order to secure a deal with the International Monetary Fund (IMF). The IMF in a contentious, drawn-out negotiation with Islamabad, demanded that Pakistan boost its tax revenues as one of the terms of the agreement. [caption id=“attachment_13055222” align=“alignnone” width=“640”] People in Pakistan are paying Rs 42 per electricity unit. ANI[/caption] Indian Express quoted Kristalina Georgieva, managing director and chair, IMF, as saying, “The anticipated improvement in tax revenues is critical to strengthen public finances, and to eventually create the fiscal space needed to bolster social and development spending…In parallel, the authorities urgently need to strengthen energy sector viability by aligning tariffs with costs, reforming the sectors cost base, and better-targeting power subsidies.”
As per Business Today, the Pakistani public is being charged Rs 42 per unit of electricity.
As per The Times of India, Pakistan’s power tariff has increased around 75 per cent over the past year, as per The Times of India. Worse, the average cost of electricity has “more than doubled for low- to middle-class households since May,” Dawn reported. The South Asia Index posted a comparison of how much the average consumer would pay in India and Pakistan.
Comparison of electricity bills for an average consumer in Pakistan & India:
— South Asia Index (@SouthAsiaIndex) August 27, 2023
— Total units consumed: 300
— Average bill in 🇮🇳: 1300 INR
— Average bill in 🇵🇰: 12,000 PKR
■ Taxes on a 5000 electricity bill:
🇮🇳: 700 rupees
🇵🇰: 1800 rupees
Impact Shorts
View AllAuthorities in Pakistan have also blamed increasing energy rates for the electricity hike, as per Indian Express.
An editorial in the newspaper Dawn has called for structural reforms.
“The bad news is that electricity prices in the country will continue to climb even after a downturn in international fuel prices as long as there is no move to undertake long-standing power sector reforms in order to sharply cut system losses, control the allegedly rampant corruption in the distribution companies, stop widespread power theft by the powerful, and, more importantly, reduce reliance on imported fuels by shifting to local fuels for generation and encouraging renewable energy,” the editorial stated. Speaking to India Today, historian Ammar Ali Jan, assistant professor of history, Punjab University, Lahore, said the public is releasing its fury after being confronted with a whole host of crises. “The frustration is over the multiple crises including political instability, authoritarianism, social contradictions and climate catastrophes that have made people’s lives precarious. Protests against the electricity hike is a symptom of these disparate crises and a point of convergence for their expression,” Ali added. What is the government doing? The Pakistan-based The Express Tribune reported that the caretaker government is considering providing a one-slab benefit to households.
The government on Monday held a high-level meeting to address the issue.
During the meeting, there were discussions over various proposals intended to reduce the distress of the power consumers, which will subsequently be presented to the federal cabinet for approval on Tuesday. Sources said that the plans to extend installment relief to the consumers for the bill payments were discussed, giving the citizens an option to pay their bills in more than two instalments and easing their financial burden, according to The Express Tribune report. Similarly, another proposal that is being considered is to provide relief to the people by allowing them to pay a portion of the electricity bill during the winter months when energy consumption reduces. Furthermore, the meeting sought the Pakistan Finance Ministry’s views on slashing the taxes imposed on the electricity bills. The final decision regarding tax reduction will rely on whether it contradicts the agreement between the government and the International Monetary Fund (IMF). The source said, “If the reduction in taxes is not repugnant to the agreement with the IMF, then the government will definitely cut the existing taxes on the electricity bills.” Pakistan’s Ministry of Energy said that a high-level meeting on power bills had taken place. Pakistan’s Caretaker Minister for Information and Broadcasting Murtaza Solangi said that the energy ministry has finalised recommendations with respect to the electricity bills, The Express Tribune reported. The recommendations were finalised at a high-level meeting that took place at Pakistan’s Ministry of Energy. On Sunday, Pakistan’s interim Prime Minister Anwaar ul Haq Kakar held an emergency meeting during which he directed authorities to devise “concrete steps” within the next 48 hours for a reduction in electricity bills. [caption id=“attachment_13055232” align=“alignnone” width=“640”] Pakistan’s interim Prime Minister Anwaar ul Haq Kakar has pledged to take “concrete steps” to reduce electricity bills. ANI[/caption] The directives were issued at the emergency meeting at the PM’s Office (PMO) convened by Kakar in a bid to address the complaints about excessive electricity bills. “We will not take any step in haste that will harm the country. We will take measures that won’t further burden the national exchequer and will facilitate the consumers,” Kakar said at the meeting. “It is not possible that while the people face difficulties, high-ranked officials and the prime minister continue to consume free electricity paid for with the taxes people pay,” he added. He directed relevant departments and ministries to submit to him the details of the officers who were being provided free electricity, said a statement issued by the PMO.
“I represent the common man,” the prime minister said.
He pledged that measures would be implemented to minimise electricity consumption at the PM House and Pak Secretariat. For that, he added, “even if the air conditioner in my room has to be turned off, do it.” Regarding Monday’s meeting, the prime minister said he would hold a detailed consultation with provincial chief ministers on the exorbitant bills for July and the implementation of measures for energy conservation. Seeking a roadmap from electricity distribution companies to curb electricity theft, he directed relevant authorities to submit a short, medium and long-term plan for reforms in the power sector. In a post on platform X, the premier said that the interim government would try to provide as much relief to the people as possible while operating within its mandate. PTI blames PML-N Interim Finance Minister Shamshad Akhtar, caretaker Commerce Minister Gohar Ijaz, interim Information Minister Murtaza Solangi, adviser to PM Kakar Dr Waqar Masood, the power secretary, Water and Power Development Authority chairman, National Electric Power Regulatory Authority chairman and other relevant officials attended the meeting. The Pakistan Tehreek-e-Insaf (PTI) blamed the Pakistan Muslim League-N party for the rising cost of electricity, warning that power tariffs might jump to around Pakistani Rupee (PKR) 85 per unit in the next few months, Dawn reported. With protests erupting over inflated power bills, PTI secretary general Omar Ayub Khan said the PML-N government was responsible for the “inflated and unbearable” electricity bills He stated further that the PML-N was making the country dependent on expensive imported energy, as the capacity payments due to take-and-pay contracts had touched PKR 2,000 billion this year. “PML-N made Pakistan dependent on expensive imported energy and today 70 per cent of the electricity produced in Pakistan is dependent on imported fuels,” he said. The fuel price adjustments were getting higher due to the rupee’s devaluation, he said, claiming that the price of electricity had jumped by more than four times in just 15 months - from PKR 16 per unit during PTI’s tenure to PKR 68 per unit, Dawn reported. After the surge in electricity bills, the general public and traders’ associations staged protests in multiple cities and later this matter went to Pakistan caretaker Prime Minister Anwarul-Haq Kakar. Looking at the matter, he called an emergency meeting on Sunday. The Express Tribune reported that the caretaker premier called the meeting in Islamabad and directed the energy ministry and the electricity distribution companies to give a detailed briefing in this regard. As per the statement from Pakistan’s PMO, consultations will be held regarding giving maximum relief to consumers regarding electricity bills. Earlier, a protest in Karachi, which was also supported by Jamaat-e-Islami (JI), demanded a reduction in the ever-increasing electricity prices and additional taxes imposed through power bills. Addressing the protesters, JI’s Karachi Amir Hafiz Naeemur Rehman, warned that if the government continues to burden the public, the situation could further deteriorate. “Our struggle is against the white-collar mafia in KE,” he said, underscoring the commitment to represent the people’s interests, reported The Express Tribune. At a similar protest in Pakistan’s Rawalpindi, the demonstrators raised slogans against Islamabad Electric Supply Company. The publication reported that protests were also staged in Lahore, Attock, Peshawar, Quetta, Taunsa, Hyderabad, Nawabshah, Rahim Yar Khan and Multan against the inflated electricity bills. A large number of people participated in the demonstrations. Earlier, a report stated that Pakistan is burdened with costly plants and commitments that people have been struggling to pay for, The News International reported. Pakistanis paid Rs 41 billion for partial load adjustment charges in 2022, resulting from the underutilisation of thermal power plants (with only 46 per cent utilization) and Rs 721 billion in capacity payments, the report noted. With inputs from agencies
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