LAHORE, Dec 11: The 12-paisa reduction in power tariff, though a welcome relief for the common man, has failed to satisfy experts, according to whom, the government could have provided a more substantial relief had it completed the spadework before taking a “politically-motivated and hasty step”.

A former member (finance) of Wapda thinks that the government had many policy options for giving a relief of up to Re1 per unit.

For a relief of 88 paisas per unit, the government could have removed the General Sales Tax on unprotected categories and saved almost Rs7,091 million. Elimination of the advance tax on power bills could have saved another Rs1,886 million while allocation of an additional gas quota of 50MMCFD would have provided a relief of Rs768 million. Capping the furnace oil and gas prices at Rs10,000 per metric ton and Rs125 per million cubic feet respectively might have given Wapda a breathing space of Rs5.397 billion. A debt-to-equity swap by the government could have provided a further relief of Rs5,122 million. Together, the relief would have amounted to Rs20.264 billion and brought down the power tariff by at least 88 paisas per unit.

However, instead of introducing policy changes, the government opted for a politically-motivated eyewash, he added.

According to another proposal, which was forwarded by a former member (power) of Wapda, the government could have taken four of the above-mentioned six steps by allocating the additional gas quota, capping the oil and gas prices and swapping debt with equity and still provided people a relief of 50 paisas per unit. Add to it a 50 per cent reduction in the GST and the advance tax and the relief would have amounted to 69 paisas per unit.

Another option, albeit a difficult one, would have been direct subsidy.

However, both the experts said, the government opted for a politically convenient approach and slashed the tariff by 12 paisas across the board — which also did not make any sense. The government should not have given relief to the already subsidised classes. Instead, it should have given more relief to the commercial, industrial and agriculture consumers, who were paying a higher price, they added.