Prime Minister Shehbaz Sharif, while recently chairing a meeting on enhancing investment and economic growth, emphasised the government’s commitment to bolstering investment in the country and underscored efforts to create a business-friendly environment for traders and investors. The PM further instructed the relevant authorities to establish a steering committee dedicated to monitoring progress in these areas, with him presiding over its proceedings. Additionally, in another meeting, the PM directed the concerned authorities to expedite the process of implementing the agreements and Memorandums of Understanding (MoUs) made with the Chinese government and companies to facilitate the transfer of Chinese industry to Pakistan, which would help improve the country’s overall economy, increase Pakistan’s exports, and create new employment opportunities.

However, trade and industry representatives have urged the government to seriously address the issue of high electricity tariffs for all categories of consumers, particularly export and general industries, and rationalise these tariffs to reduce production costs. The high energy tariffs are rapidly making local goods uncompetitive in international markets against competitors such as Bangladesh, India, Indonesia, Vietnam, and Egypt. Recent statistics further support the concerns of trade and industry, showing that the country’s power generation fell by 2 per cent to 127,259 GWh (14,504 MW) year-on-year during FY24 due to a slowdown in overall economic activity and lower demand amid rising power tariffs. Even in the current sweltering heat, people are reducing their use of electricity; while governments worldwide are trying to raise the standards of living for their people, our government is forcing people to revert to the ‘stone age’, when they sought shade under trees and cooked food by burning wood. Despite people being without electricity for hours and still receiving bills of thousands of rupees, the government and its functionaries are getting free, uninterrupted electricity at the expense of the local populace.

In summary, the local trade and industry are decrying high electricity tariffs, which are forcing business closures and making the export industry uncompetitive against other regional players, and the local populace is being tested to their limits. Despite these negative indicators, the PM and his government are optimistic that China and other countries will invest in Pakistan or relocate their industries to Pakistan.

The underlying root cause of exorbitant power tariffs and the economic ruin of the country are the contracts signed with independent power producers (IPPs). Capacity payments have already crossed alarming levels without any significant addition in electricity consumption. This burden is being transferred to consumers who are already struggling under high inflation, further squeezing them. The entire burden has been placed on the public to favour 40 IPPs—the 40 thieves. In the country, 25% of the IPPs are closed, yet these closed IPPs receive monthly payments of Rs10 billion, causing the national treasury to sink further into crisis. Additionally, IPPs are charging capacity payments of Rs24 per unit even for unused electricity.

Thus, the agreements signed with IPPs have now become a question of survival for the entire nation. The government needs to act proactively and decisively, and for once, take action in the interests of the country and its people. It should renegotiate or, where necessary, terminate these contracts to help the economy get back on track and ease the financial burden on people, who are already squeezed by inflation and widespread unemployment.

Ahsan Munir
The writer is a freelance columnist.