The federal cabinet made two right decisions at its meeting on Wednesday.
One was to send the changes to the net measurement policy to the Ministry of Energy for reconsideration. And the other was to restore a reimbursement of taxes allowed researchers and teachers in higher education institutions, which all were told suddenly in December 2024 had retired in the budget announced in June 2022.
In both cases, we had a story that was quite typical of how things are done in Pakistan and how a problem to solve. In the case of solar policy, the Ministry of Energy literally had the explosive success of its last net measurement policy and presented it as a failure, arguing that all the beneficiaries of that policy were “elites” that had become a burden on the energy system, and bring this load was the main reason why the electricity bills had become so expensive.
This was a fairly strange way to perceive success. One would think that if they could add something like 7,100 megawatts of energy generation capacity without paying anything about the state’s money, it would be good. They said that 283,000 homes had taken advantage of the net measurement policy, and this number was very small compared to 40 million homes in the network.
The lasting problem here is that this figure, 283,000, really needs to go up to 40 m, and the question they should have jumped to wonder was ‘What is the best way to get there?’ Instead, they asked ‘how do we stop this?’
Everything is fine that ends well. But, nevertheless, it is a good idea to find lessons that are based on such episodes.
It was something similar with the withdrawal of tax reimbursement. I use this as an example because it impacted the income not of the elite, which have been under the anvil in any case, since the government struggles to stabilize its fiscal equation, and also because it is illustrative of the way in which our fiscal bureaucracy has become accustomed to operating over the decades. Everyone who directs their own business has horror stories to share their experiences with the tax authorities.
In the case of the refund in question, the universities around Punjab received a notice from their Higher Education Department of the Provincial Government informing that ‘Clause 2, Part III, the second time of the Income Tax Ordinance 2001 has been omitted’ in the Finance Law 2022. The clause covers the refund enjoy They will have recovered the two years of the two years of Rarrea.
It could now assume that the teachers and researchers of the Pakistan higher education system are not exactly ‘elites’, and without a doubt many were quite worried that a very pronounced tax invoice is about to be withdrawn from them for something that nobody knew for two years. If this reimbursement was withdrawn in 2022, how were everyone asleep since then and only woke up in December 2024 to begin demanding the recovery of this tax, along with arrears?
Fortunately, better sense prevailed. The news reports appeared shortly after, citing the Minister of Finance saying that the Government was asking for permission to the IMF to allow this refund to continue, and now it seems that this permit has been granted and the cabinet has agreed to reintroduce the reimbursement through some type of legislative action, whether it is an ordinance or perhaps the inclusion in the money bill for the next budget and giving its retrospective effect.
Everything is fine that ends well. But, nevertheless, it is a good idea to find lessons that are based on such episodes. Lesson one, the big mistake made by the Ministry of Energy was for Malhangar the messages about its revision of net measurement policy. They arrived at the beneficiaries of their own policy as a “burden” and presented the explosive growth of the generation of the solar roof in the country as a problem to solve. On the other hand, the simplest is to say ‘our net measurement policy has been a massive success, we have seen an explosive growth in the adoption of the clean generation of the green solar roof as a result of it, and the cost of a solar energy unit has decreased massively.
Now the Government wishes to approve the benefit of this price drop to people, and the revised net measurement policy will guarantee this by aligning the net measurement rate with the rate paid to commercial suppliers of public services scale since last year ‘.
It is an important rule to execute politics: it has its success! Do not do poor condition of the beneficiaries of your own policy! If someone has benefited from their policy, present as a benefit to the country and present the review you are looking to do as the next step in the entire “become green” process.
But our electricity sector bureaucrats are occupied solving the wrong problem. On the other hand, they made public that the Minister of Energy became public about their “fixed costs”, and made it present their transmission and distribution losses as a problem that the public must pay. It is not the obligation of energy consumers to pay the “fixed costs” of the minister or carry their losses, especially if there is an alternative available to us.
Similarly, tax refund. It is good that the cabinet and the IMF agreed to bring it back. But the sudden with which it was discovered that this reimbursement is “omitted” and the notices began to be treated in universities talk about how a predatory culture has rooted in the fiscal bureaucracy.
How could they think that these notices could simply meet and start raising taxes without asking very important questions about their own professionalism and competence? It is this impunity within which the fiscal official operates and that presents a problem here. Both episodes will be resolved, for now, but hopefully the superiors in the respective bureaucracies and their ministers will be diges to derive some lessons from them. Taxpayers and energy consumers are not lambs to be flown at will.
The writer is a business and economy journalist.
khurram.husain@gmail.com
Posted in Dawn, March 27, 2025
