At the terminal stage

The cancerous disease of Pakistan’s power market is becoming terminal with each passing day despite overdoses of price shocks to consumers. At the start of the fiscal year in July, the PDM government came with a capital blow to increase electricity tariff by a massive 47 per cent (Rs7.91 per unit) to “clear the backlog” left behind by the previous PTI government in “violation of international agreements” with the International Monetary Fund. The circular debt, as of June 30, 2022, stood at Rs2.253 trillion. The tariff increase was aimed to generate additional revenue and bridge a financial gap of Rs893 billion in 2022-23 in meeting annual revenue requirements of about Rs2.52tr of the power companies, excluding K-Electriic, besides providing a general sales tax of more than Rs425bn to the government. It was promised that such a massive increase would take care of the delayed tariff notifications in the past and prices would begin to go down in October. On completion of first quarter financials, it became clear that despite those back-breaking cost increases, the financial gap would conservatively remain on the higher side of Rs706bn — almost 1pc of Gross Domestic Product — during the current fiscal year. With little ‘realistic’ estimate, the gap is set to go beyond 803bn.