The unbearable cost of electricity consumption.


Byline: Dr. Shahid Rahim

Our government has raised the electricity tariffs yet again. These frequent increases in electricity tariffs are problematic for a number of reasons, but more than anything, it clearly demonstrates that the government has no new solution in hand to deal with power sector issues other than taking the path of least resistance - further squeezing those helpless consumers who are already struggling miserably under the heavy burden of an endless streak of electricity tariff hikes in the country.

There are news reports also that the government through its Economic Coordination Committee (ECC) has approved increase of power tariff by 26 paisa per kWh to meet an IMF conditionality against the15 paisa per kWh raise that the National Electric Power Regulatory Authority (NEPRA) had recommended to it. This recent raise will be on top of the Rs.1.83 per kWh increase that NEPRA had approved during the first week of November 2019. This decision, therefore, casts shadows on the much trumpeted independence of NEPRA as the government proved that it can bypass the regulator whenever it considers this to be expedient.

A critical consideration when fixing tariffs of an essential utility such as electricity is its "affordability" for the general public as well as productive sectors of the economy. When the price of such an essential service rises beyond a few percent of the monthly income of residential consumers, it starts to have a punishing effect on their livelihood as families are compelled to cut corners on some of their other basic needs such as food, health, and education. Such price increases also adversely affect the competitiveness of the products and services of industrial, agricultural, and commercial consumers leading to their losing market share and, in extreme cases, even driving them out of business.

Like the invested costs of the installed power plants, the wrong decisions of the previous regimes that have led to these investments are also sunk and no amount of chest beating by the present rulers is going to reverse these. Wisdom demanded that, instead of digging graves as to who was responsible for the current mess in the power sector and why, the government should focus on making efforts to ameliorate the current crisis and steer the nation towards a more affordable, secure, and sustainable energy future. The government, however, appears stuck in history and unable to move forward. Fifteen months on into power, and...

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