IMF and Pakistan’s helplessness: Shafaiq Ahmed

by Tauqeer Abbas

The caretaker government has made a plan to give relief to the people suffering from inflation and over-billing. Government sources say that the relief in the bills of consumers who use up to three hundred units of electricity will be received in the October bills.

On the other hand, at a time when people are unable to pay their electricity bills, an additional burden of Rs 1.3 trillion is being added to capacity charges, which are due to be paid to the defunct power plants this year. . Apart from the fuel price adjustment in the bills, the quarterly adjustment has done the trick.

According to experts, it is not possible for the current caretaker government to reduce or delay any tax collection in view of maintaining fiscal balance and pressure from the IMF. The main reason why electricity is expensive in the country is the imposition of capacity charges, which are additional fees to maintain the country’s electricity production capacity.

The government has termed the capacity charges as a necessary measure to meet IMF conditions and ensure uninterrupted power supply in the country.

However, many have questioned the logic and fairness of this policy, especially when the country still faces frequent load-shedding and power outages.

The huge bills have created immense hardships for ordinary Pakistanis who are already struggling with inflation, unemployment, poverty and corruption.

The worst news in this whole situation is that no matter how many meetings are called by the caretaker prime minister, the electricity prices in the country will remain unchanged under the agreement made with the IMF. Fuel prices will increase in Pakistan despite lower prices in the international market.

According to the Power Division, the revolving debt of electricity is continuously increasing and the main reason for its increase is line losses and theft by electricity distribution companies, while the revolving debt is also increasing due to non-payment of electricity bills. .

In the recent $3 billion agreement with Pakistan, the IMF has stipulated reforms in the power sector and curbing revolving credit.

The government has increased the electricity prices by 81% in the last one year, but despite this, the revolving debt of electricity has increased by 400 billion rupees. The government has 23 percent theft in the power sector, known as line losses, to be reduced to ensure affordable power supply.

Faults related to the electricity transmission system in Pakistan are common but electricity theft is also a very important problem which is leading to theft of electricity worth 520 billion rupees every year. When electricity is stolen, the cost of the stolen electricity is distributed among all consumers.

In this regard, the rate of electricity theft has also been reported in some cities. The electricity theft rate in Peshawar is 37 percent. 35% of electricity is stolen in Sukkur. 32% of electricity is stolen in Hyderabad, 28% in Quetta, 11% in Lahore, 9% in Gujranwala and 9% in Faisalabad.

While domestic consumers are worried about the recent increase in electricity prices, there are fears that exports will be affected. Electricity production is increasing in Pakistan from expensive sources. The cost of electricity for the textile industry in Pakistan is much higher than in regional countries. In India, electricity is being supplied to the textile industry at eight cents, in Bangladesh at 10 cents and in Vietnam at six cents.

Heavy taxes on electricity bills, cross-subsidies and inefficiency of electricity distribution companies are being passed on to the consumers and in the current situation the country’s exports cannot compete with other countries in the global market.

A rise in electricity prices will drive factories out of jobs, discourage further investment and reduce exports. Due to increase in electricity prices and unfavorable domestic and international conditions, domestic exports have decreased to 16 billion dollars and are expected to further decrease to 12 billion dollars next year.

50 percent of the textile industry is inactive. If the situation continues, 25 percent of the textile industry will be closed down, which may cause a loss of 10 billion dollars to the national exchequer. , ranging from cottage industries to multinational industries, 60 percent of jobs have been lost due to the current situation.

Due to the lack of employment, the law and order situation is deteriorating, due to the high cost of electricity and gas, the situation is deteriorating, due to the increasing value of the dollar, industries are closing down.

The state will have to take major decisions to stop electricity theft. Thirty percent of electricity is not being recovered, the bills of officers’ houses and offices are not being paid. Why are contracts with power plants not revised on capacity payment? Next year two thousand billion rupees will have to be paid as capacity payment.

Shafaqna Pakistan

Note; Shafaqna do not endorse the views expressed in the article 

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