A SECOND cycle of nationwide protests and agitation against the ballooning price of electricity will start soon. On Monday, the National Electric Power Regulatory Authority will hold a public hearing on a proposal to squeeze out Rs700bn more from customers through a revised electricity tariff applicable from the first of this month. Since this tariff revision is considered a ‘necessary step’ to meet revenue requirements outlined by the IMF for Pakistan to qualify for yet another bailout package, the hearing is likely to be a mere formality. Therefore, as soon as the proposal is formally accepted, the per-unit price of electricity will go up by an average of Rs5.72 for all of next year, which will increase the base tariff to Rs35.50 per unit, compared to Rs29.78 for the current year. However, the real, applicable rate of every unit of electricity will average between Rs65 and Rs72 per unit, as customers will also be billed for surcharges, taxes, duties, and levies, as well as monthly and quarterly adjustments. The impact of these changes will begin sometime later this month, with the poorest expected to see their bills rise by as much as 51pc.

A nationwide, prolonged heatwave over most of June and early July would have likely necessitated an increase in electricity usage, which is why the higher tariff will come as a double whammy for those households which were not careful about their consumption. The question is, does the vast majority have sufficient fiscal space in their household budgets to absorb the impact? It is unlikely. Wage growth has been greatly outpaced by inflation in recent times, and because of stagnating growth, most households have consistently lost purchasing power over the past few years. This much has been evident from the sharp decline in electricity consumption. Of course, electricity charges need not be so high: though the government cannot easily avoid capacity charges, curtailing theft and line losses remains a common-sense measure to bring prices down. Yet successive governments have remained uninterested in enforcing tighter regulation, letting helpless consumers pick up the tab. Last year, the protests had eventually simmered down: the question this year is whether the public has finally reached a breaking point or if there is room still for it to continue absorbing the costs of policy failure.

Published in Dawn, July 6th, 2024