Electricity consumers in Pakistan are anxiously awaiting relief as rising costs have created significant financial strain. During a meeting chaired by Prime Minister Shehbaz Sharif, it was agreed to provide relief to consumers using up to 200 units of electricity. Addressing the meeting alongside party president Nawaz Sharif, Prime Minister Shehbaz Sharif emphasized that providing relief to the public is his top priority. This meeting holds particular importance as it seeks to address a key election promise made by the Pakistan Muslim League-Nawaz (PML-N) during the February 2024 elections, which included the provision of free electricity for up to 300 units. Public reminders of this promise have been constant since the PML-N assumed power.
Since taking office, the PML-N government has struggled to deliver on its utility bill relief promises. In fact, the last five months have seen such steep increases in electricity and gas bills that many export industries are on the brink of closure, and some individuals have resorted to suicide due to their inability to pay these bills.
The steep rise in electricity rates over the past three years has been attributed to previous governments. In September 2023, caretaker Prime Minister Anwar-ul-Haq Kakar blamed past administrations for the country’s economic woes during a conversation with journalists. He announced plans for reforms in agriculture, minerals, information technology, and textiles, and promised future relief packages for electricity consumers, though he refrained from sharing specific details to avoid criticism if the promises could not be fulfilled. This announcement alleviated a week-long uncertainty, despite interim Finance Minister Shamshad Akhtar previously rejecting any relief due to binding agreements with the International Monetary Fund (IMF).
The high cost of electricity is largely due to agreements with Independent Power Producers (IPPs), which are non-utility generators that produce electricity for sale to the national grid. IPPs often sell power through Power Purchase Agreements (PPAs) to third parties. The agreements with these producers have contributed significantly to the financial burden on consumers.
High electricity costs are a major concern for both household consumers and industrial sectors. Pakistan’s electricity generation capacity stands at 43,775 megawatts, with 26,683 megawatts from thermal, 10,635 megawatts from hydropower, 1,838 megawatts from wind, 630 megawatts from solar, 369 megawatts from biogas, and 369 megawatts from nuclear energy. Private entities operate 49 power plants, generating around 19,000 megawatts, while national consumption has never exceeded 31,000 megawatts. The government often cites payments to IPPs as the reason for high electricity prices. However, it is argued that renegotiating these agreements could reduce power generation by up to 10,000 megawatts, positively impacting Pakistan’s foreign exchange reserves and overall economy.
Electricity prices exceeding seventy rupees per unit are untenable for both consumers and businesses. Such high costs prevent households from affording basic electricity and hinder industrial operations, leading to widespread protests from both public and business communities. Consequently, authorities have initiated legal actions against electricity theft and bill defaulters, while government data reveals that 34 government entities and their officials consume free electricity, adding billions of rupees to the burden on consumers and businesses.
The public demands that the government reconsider its policies. It is evident that the cost of lost units due to theft or free consumption is unfairly passed onto paying consumers. The government should establish a fair system that ensures relief for general consumers.
Furthermore, electricity consumers are also bearing the burden of tax evasion in other sectors. The government should focus on improving alternative tax systems and revisiting agreements with IPPs to facilitate consumer relief. Repeated promises of relief have yet to materialize, and consumers are now waiting for concrete actions. Economic recovery is closely tied to providing relief to electricity consumers, and if Shehbaz Sharif succeeds in this endeavor, public trust in his administration could be significantly bolstered.
GULAB UMID,
Turbat.