The Prime Minister Shehbaz Sharif focus on low cost electricity for economic stability as a crucial step in addressing Pakistan’s ongoing economic challenges. By reducing power prices, the government aims to offer relief to various sectors, including domestic consumers, agriculture, industry, and exports, while also laying the groundwork for long-term economic stability.
Government’s Commitment to Reducing Power Prices
Addressing Economic Challenges The prime minister highlighted that the reduction of power prices is essential to overcoming the country’s current economic issues. He stressed that the competitiveness of Pakistan’s exports is directly linked to the availability of affordable electricity, making it a priority for the government to lower energy costs across the board.
Facing Criticism The government’s decision to increase power tariffs has faced widespread criticism. Last month, the National Electric Power Regulatory Authority (Nepra) approved the government’s request to raise the base tariff by up to Rs7.12 per unit for domestic consumers, bringing the rate to Rs48.84 per unit, excluding taxes. However, the government provided a temporary exemption for consumers using up to 200 units per month, sparing them from the hike for three months from July to September 2024.
Plans for Rationalizing Power Tariffs
Proposals for Power Tariff Rationalization In response to the rising power costs, the government is considering various proposals to rationalize tariffs. These proposals include reducing the allocation of development budgets at both federal and provincial levels and potentially closing down Independent Power Producers (IPPs) in both the government and private sectors. However, the International Monetary Fund (IMF) has not yet endorsed the government’s power rationalization plan.
Focus on Low-Cost Electricity and Efficient Transmission Prime Minister Shehbaz Sharif reiterated the importance of low-cost electricity and an efficient power transmission system as key factors for achieving a stable economy. He pointed out that the Special Investment Facilitation Council (SIFC) is actively working to achieve these goals.
Challenges Ahead for Power Distribution Companies (Discos)
Merit-Based Appointments The PM Shehbaz Sharif Focus on Low Cost Electricity for Economic Stability, For this he emphasized that the government had appointed highly competent and experienced individuals as chairmen and board members of power distribution companies (Discos) through a rigorous selection process. These appointments were made purely on merit, with the aim of eliminating political influence and improving the efficiency of Discos.
Addressing Mismanagement and Corruption PM Shehbaz Sharif acknowledged that the newly appointed officials face significant challenges, including the need to address mismanagement and corruption within the Discos. He highlighted that power theft, which has resulted in an annual loss of approximately Rs500 billion, is a major issue, often facilitated by Discos staff members. The prime minister urged the new officials to work diligently to tackle these problems and improve the overall system.
The Issue of Circular Debt
Mounting Circular Debt The PM Shehbaz Sharif drew attention to the growing problem of circular debt, which has reached Rs2,300 billion—nearly one-third of the country’s total receipts of Rs9 trillion last year. He questioned whether the country could sustain such a significant burden and stressed the need for urgent action to address the issue.
Smart Metering and System Improvements In response to the challenges facing the power sector, Prime Minister Shehbaz Sharif instructed the immediate launch of smart metering in some Discos to improve efficiency and reduce losses. He also highlighted the importance of addressing line losses and strengthening the power transmission system.
Collaboration with China
Coal-Fired Power Plants The PM Shehbaz Sharif Focus on Low Cost Electricity for this mentioned ongoing discussions with China to run power plants using a mix of coal, which could potentially save Pakistan $1 billion annually. This initiative is part of the government’s broader efforts to reduce energy costs and improve the sustainability of the power sector.
Previous Efforts and Achievements Shehbaz Sharif also recalled the installation of LNG plants during Nawaz Sharif’s tenure, nearly a decade ago. These plants, which operate with 63% efficiency and at nearly half of Nepra’s tariff, demonstrate the government’s past commitment to improving the energy sector and reducing costs.
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