Of the approximately 200 states that constitute the world, Pakistan has picked up a rare distinction. It is the only country where in the previous two years, electricity rates were hiked up 22 times.
Electricity here is state controlled. And the definition of a state is an entity where a government collects taxes form its people to make the lives of its citizens better, easier and prosperous. The route of economic progress is taken up by the state to make cultural, social and political progress. For a developing country like Pakistan this route will come about only through industrialization, the life blood of which is electricity. Nearly all economic and social indicators are directly or indirectly linked to electricity and its cost.
Let us be clear about what rising energy costs mean for the country. Expensive electricity means joblessness, deprivation and even destruction. By one estimate, nearly 90 million live below the poverty line and another 90 are poor or destitute. To eliminate these figures, industrial progress is a necessity, and for industrial progress cheap electricity is like oxygen.
It’s astounding, then, that after the 1990s, every government signed deals with IPPs. Yes, we did get electricity but these contracts were based on profits and corruption, resulting in one of the highest electricity production rates in the world. From a domestic consumer to an industrialist, from a trader to an investor, everyone is subject to the cruelty these high rates exact.
The fault for these high rates falls squarely on the shoulders of former Benazir Bhutto. Later, Musharraf’s and Nawaz Sharif’s governments did their part in continuing the harmful policies. It is pertinent to remember that according to experts Pakistan can produce electricity from dams at Rs. 2 per unit and from atomic sources at Rs. 4 per unit. But the ruling class instead chose to sign deals with IPPs, making costly electricity the major problem the country faces. IPPs can produce an electricity unit at even Rs. 20 per unit but despite these facts, neither Benazir Bhutto, nor Nawaz Sharif, nor General Pervez Musharraf and nor Imran Khan have given serious thought to producing cheaper electricity.
Imran Khan had come into power to build a new Pakistan but since September 2018, his government has hiked electricity prices near constantly, forming the kind of world record no country desires. And the process hasn’t ended yet. In the past 21 months, a cumulative Rs. 20.73 were added as fuel adjustment, extracting Rs. 200 billion from cash-strapped consumers. The total additional burden transferred to users is a staggering Rs. 777 billion. The whole amount that people paid up is close to an astonishing Rs. 1300 billion. And yet, circular debt continues to rise, peaking at an expected Rs. 2800 billion by the end of this financial year.
With such expensive electricity and this high circular debts, economic progress is a mad man’s dream. Agreements with IPPs need to end, while the national priority should be production of cheaper electricity.
If this problem is not resolved, poverty and joblessness will be our constant companions in the future, as they have been till now.