TALKING is cheap. Can electricity also be? The government has recently announced that Pakistan will benefit from the lowest electricity tariff in this geographical area in the coming months.
Various measures have been and are being taken to this end, the most notable of which are the cancellation and renegotiation of old contracts with the IPPs, the appointment of new “apolitical” boards of directors to manage the power companies, and anti-theft campaigns to catch evildoers and defaulters.
The circular debt spiral appears to have been arrested and even slightly reversed, and losses recorded by distribution companies have reduced in the first five months of the current fiscal year. Without a doubt, these are good signs. However, sustainably solving the country’s complicated energy problems requires an iron will and the ability to walk a tightrope while making difficult decisions.
The government has been under pressure from certain quarters to push for an extension of the deadline to cut gas supplies to captive power plants by the end of January, agreed with the IMF under the conditions of its bailout program for Pakistan. The government had previously given its consent to the move, but then realized that it would create new problems for connected stakeholders.
Be that as it may, Islamabad’s inability to show coherence and adhere to the agreed terms raises doubts about its ability to deliver long-term reforms. Every time it changes its stance, the government indicates that, first, it does not trust its policies and, second, that its decisions are not designed to offer long-term solutions. This lack of coherence is also what encourages lobbyists and special interest groups to continue trying to derail reforms that affect their interests.
The promise of the region’s cheapest electricity tariff is welcome, especially for the inflation-weary Pakistani masses. However, to achieve this, the government will have to stay the course, make bitter decisions and take responsibility for its decisions.
Published in Amanecer, January 18, 2025.
