POWER consumers in the city of Karachi recently woke up to news that read a little like an electric shock. For a while it appeared that not only were their power tariffs about to be hiked significantly, but that they would also have to pay arrears on elevated tariffs being applied retroactively. But as the day progressed, clarity seeped in that the hike was only applicable for the top two slabs of consumers, and all arrears would be paid by the government. In fact, what had happened was a fairly straightforward matter. Since the summer of 2013, the Sindh High Court had stayed any tariff increases for K-Electric, which are decided on a quarterly basis. That stay was only vacated this June. In the meantime, tariff increases had been effected for consumers in the rest of the country, thereby creating a large differential in what Karachi consumers were paying versus everybody else. Therefore, new tariffs were decided by Nepra, the power regulator, for K-Electric spanning the entire period from the summer of 2013 till the present, finally creating uniform tariffs for all power consumers in the country.

It is important that in the matter of key administered prices such as power, gas and fuel, there be no discriminatory treatment between consumers in different parts of the country. The stay issued by the Sindh High Court appeared to interfere with this principle, and ended up creating two different power tariffs in the country. A similar stay issued by the Peshawar High Court in 2011, and extended in 2013, had much the same effect. Not only did these stays end up creating a highly unfair price framework for power in the country, they also introduced serious distortions in the government’s subsidy expenditures and in the case of the PHC order, also wrecked the financial health of the Peshawar Electric Power Company. The exercise of judicial power in the matter of administered prices resulted in hurting consumers, government finances as well as the financial health of the power distribution company. In short, there were no winners. It is true that the government should be dissuaded from passing the cost of inefficiencies in the power sector onto the consumer through regular tariff increases. But the present case illustrates that using the courts to interrupt key policy decisions on administered prices does more harm than good. The courts ought to be more judicious in using their power to grant stays in matters that relate to administered prices.

Published in Dawn, July 6th, 2015

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