Amidst numerous other challenges, Pakistan’s electricity crisis is shaping up to be its concerning, as protests against inflated bills continue nationwide. According to recent disclosures by the interim government, the crisis results from substantial transmission losses, dollar-pegged capacity payments, fuel costs and “free electricity” for certain sectors that cost between Rs. 22 billion and Rs. 25 billion annually. To make up for the losses, and meet commitments to the International Monetary Fund (IMF), the government has opted to pass on the full impact of energy costs to consumers.
Unsurprisingly, a populace already burdened by inflation of over 25 percent is now refusing to pay electricity bills, with authorities warning that this could lead to their connections cut. That, in turn, leads to lower consumption and recoveries, which encourage the government to charge ever higher prices on the consumers who continue to pay their bills. This crisis is unlikely to be resolved any time soon. Pakistan needs to reform its transmission system to reduce losses and also take steps to curb electricity theft, especially in the country’s remote regions. This requires funds, which the country lacks amidst an economic crisis that has led to a severe devaluation of the rupee, further reducing the purchasing power of the average citizen.
According to data provided by the State Bank of Pakistan, the country currently has a total national debt of over $200 billion, roughly 90 percent of its gross domestic product (GDP). The overall burden has increased in recent months as the rupee continues its decline against the U.S. dollar, crossing 300 for the first time in history last month. Amidst this, it is unlikely the incumbent interim government will be able to provide much, if any, “relief” to the public with regards to electricity bills despite tall claims to the contrary.