Competitive energy rates needed

A competitive cost of energy, particularly electricity tariffs, and its uninterrupted supply are essential for oiling the industry’s wheels. Rejecting the recent hike in electricity bills, the Federation of Pakistan Chambers of Commerce and Industries said it was “debilitating both for residential and commercial consumers, with inflation already killing businesses and rendering them unprofitable and bankrupt”. The various issues related to high electricity tariffs were also highlighted in public discourse following countrywide citizen protests, especially marked by the torching of power bills. That demonstrated how extractive policies pursued by both the government and a strong segment of the stakeholders have made a mess of the power sector. Consumers are expected to cough up Rs1.3 trillion in capacity payments to idle power plants in the current fiscal year. Under the binding agreements, independent power producers are paid capacity charges even if the government companies are unable to take electricity from them. Policymakers have failed to carry out energy sector reforms to control growing theft and power and gas sector losses and instead periodically increased prices to recover lost revenues. Honest consumers are paying for power thefts and circular debt.