Braced for higher prices.

On top of prohibitively expensive imported fuel prices, the government has come full throttle in the energy sector for a hard landing. With proposed budgetary measures in place in less than a month, the trio of electricity, gas and oil would be practically out of the affordability range of the majority of the population.

At the very outset, the energy subsidies - on electricity and gas - are cut by 56 per cent to Rs641 billion from Rs1.45 trillion during the current fiscal year.

On the other hand, elimination of subsidy on petroleum products worth about Rs1.2tr besides imposition of budgeted Rs750bn petroleum development levy (PDL) is duly provided for in the budget 2022-23. The ministers have not ruled out the possibility of revival of some general sales tax.

As if that was not enough, the power and gas regulators have already determined an increase of 45-50pc increase in electricity and gas rates effective July 1 at the rate of Rs8 per unit for electricity and about Rs266 per unit for natural gas.

Numbers paint a picture of expensive energy poised for a steeply upward trend

When asked, Finance Minister Miftah Ismail did not know how many people, after application of the above measures, would fall under the poverty line and qualify for the ever-expanding Benazir Income Support Programme (BISP) and Ehsas Programmes by next year but said he wished nobody should stay on BISP stipend but was left with no option because of devastations caused by Imran Khan and his cabinet.

However, some government officials working on sustainable development goals suggested that almost 20pc of the population, just above the lowest 30pc or so that utilises the social safety support, remains very vulnerable to poverty because of inflationary shocks while another quintile of the population would have to cut back on their health, education and food expenditures.

Finance Minister Miftah Ismail in his post-budget briefing said the government provided Rs1.1tr subsidy on electricity during the current fiscal year at the rate of about Rs11 per unit on the sale of about 100 billion electricity units.

But this also included Rs534bn paid to independent power producers including Rs100bn 'advance subsidy' to coal power plants of which Rs50bn is yet to be released.

Another Rs80bn is on account of the tariff subsidy announced by former Prime Minister Imran Khan on February 28 that is being phased out within the current month. But this is how numbers are added to build a case...