Key Takeaways:
– Government approves up to 51% increase in electricity tariffs.
– Increase affects 32.5 million consumers, mainly from lower-income groups.
– Tariff hike essential for meeting IMF bailout conditions.
In a recent article titled “Electric Shock for Millions as Tariffs Soar,” Shahbaz Rana, a senior journalist known for his expertise in economic and foreign affairs, provides a comprehensive analysis of the recent hike in electricity tariffs in Pakistan. Rana explains the significant impact of the government’s decision to increase electricity rates by up to 51%, emphasizing the burden this places on millions of consumers, especially those from lower-income groups.
He highlights that the government has approved a substantial increase in the per-unit price of electricity, effective from July. “The government on Wednesday approved up to 51% or Rs7.12 increase in the per-unit price of electricity from July,” Rana states, noting that this marks the highest percentage increase for the lower-income groups. He further explains that 32.5 million consumers, primarily households, will be affected, resulting in an additional financial burden of at least Rs580 billion this fiscal year.
Among the affected consumers, 26 million households belong to the poorest to low-middle-income segments, experiencing the highest increase in prices in terms of percentage. Rana underscores that the rise in electricity rates is largely due to “mismanagement and wrong energy policies of the past three decades.”
Additionally, for the first time, the government has imposed fixed monthly charges on residential electricity consumers, ranging from Rs200 to Rs1,000 per unit. This measure, according to Rana, was a critical prerequisite set by the International Monetary Fund (IMF) for Pakistan to qualify for the next bailout package. The federal cabinet approved the tariff increase through circulation, bypassing the usual discussion in a regular cabinet meeting. “The power tariff increase was one of the key prior actions the International Monetary Fund (IMF) has set for Pakistan,” Rana notes.
Shahbaz Rana also points out the discrepancies in the handling of the summary for the tariff increase. Unlike previous instances, the summary was quietly moved to the federal cabinet and approved through circulation, a method different from an open discussion during a regular cabinet meeting. This approach left 32.6 million consumers affected without any debate in the federal cabinet.
The Power Division had initially moved a similar summary on June 14, but objections from the IMF regarding the new industrial package led to its withdrawal. The IMF also rejected the prime minister’s Rs200 billion package, which had set the industrial electricity price at Rs34.99 per unit. As a result, the new electricity prices for the industry are now Rs37.83 per unit.
Rana details the increases across various consumption categories, stating that “the government increased the electricity prices in the range of Rs3.95 to Rs7.12 per unit for the residential consumers.” He explains that the average increase in electricity prices is Rs4.55 per unit, raising the national average uniform rate from Rs28.44 per unit to Rs33 per unit. The minimum rate is now Rs11.69 per unit, while the maximum rate is Rs48.84 per unit, excluding taxes and adjustments.
The protected consumers, who did not see any increase during the past three years, will now face a significant hike. “The government of Prime Minister Shehbaz Sharif approved the increase in the electricity prices for 1 to 100 units protected consumers from Rs7.74 per unit to Rs11.69 – an increase of Rs3.95 or 51%,” Rana explains.
Commercial users will also experience an increase, with the new rates ranging from Rs38.59 to Rs45 per unit, showing an increase of up to Rs5.84 per unit or 15%. Additionally, the government has revised the fixed charges for industrial consumers, with the new rates approved by the federal government ranging from Rs400 to Rs1,250 per kilowatt per hour per month.
In conclusion, Shahbaz Rana emphasizes the broader implications of the tariff hike, noting the significant financial strain it places on consumers, especially those from lower-income groups. He underscores the necessity of these measures to meet IMF conditions but highlights the challenges they pose for the affected population.
Source: https://tribune.com.pk/story/2476474/electric-shock-for-millions-as-tariffs-soar
