Hike in power rates

Published March 30, 2024

SUMMER is fast approaching and bringing with it more hardships for the working classes. Already grappling with a severe cost-of-living crisis, low-to moderate-income households were in for another shock on Thursday when Nepra hiked the price of electricity they had consumed during October-December 2023 by almost Rs2.75 per unit. The latest increase in power prices has been made under the quarterly tariff adjustment mechanism Islamabad had agreed on with the IMF last July to clinch the ongoing $3bn short-term deal, avert default, and shore up its international reserves. The arrears on account of the tariff adjustment will be recovered from consumers in the next three months. But the story does not end there: Nepra will soon be ruling on a petition from the power distribution companies to allow them to recover Rs7.63 per unit from their customers on account of additional fuel costs for February this year.

Over the last several years, electricity prices have been raised phenomenally to help the power distributors cope with the financial pressure resulting from currency devaluation, interest rates hikes, rising fixed capacity charges, the fallout of transmission and distribution losses and power theft. Thus, not only are consumers forced to pay additional electricity generation and distribution costs but must also bear the burden of system inefficiencies. No wonder then that electricity theft is on the rise and its consumption on the decline as electricity becomes unaffordable for most working people whose purchasing power has almost halved in the past two years amid stagnant incomes and record spikes in inflation. The speed and magnitude of increase in the cost of living since 2022 have been unprecedented, forcing consumers to cut back on spending on groceries, education and healthcare to make ends meet amid an ever-worsening situation. The living conditions of the country’s low- to moderate-income households have always been dire. However, the last two years of stubborn inflation, rocketing power and gas bills and new indirect taxes imposed to pay for the imported luxuries of the ruling classes and profits of the business elite have made their situation more desperate than ever. With the economy flat-lining, energy prices spiralling upwards and incomes continuing to fall far behind runaway inflation, ordinary Pakistanis will slide deeper into the social and economic crisis the likes of which they have never experienced before.

Published in Dawn, March 30th, 2024

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