The caretaker government on Monday failed to achieve any consensus on how to provide relief to consumers from hefty electricity bills, as senior officials met for a second consecutive day in a bid to defuse rising public anger that has triggered protests nationwide over the past week.
Key to the interim government’s inability to offer any significant concessions is the International Monetary Fund (IMF) deal inked by the previous government, which has seen the imposition of various taxes on bills in a bid to curtail the circular debt and generate additional revenue for the Federal Borad of Revenue (FBR).
According to sources familiar with the government’s meetings, authorities are considering several measures to reduce the public ire, but have few viable options as they cannot deviate from the IMF program without risking economic default. Among the most viable options is allowing consumers to repay their bills in installments, which is largely considered insufficient, as it merely passes on the impact to later months, while also adding the burden of bills from subsequent months.
Some officials have also suggested delaying the imposition of taxes until the winter months, when consumption drops, so consumers feel less of a “price shock.” Another proposal under consideration, which is gathering support, is the withdrawal of free electricity provided to various institutions and their employees, including WAPDA. Suggestions to end taxes and surcharges altogether, meanwhile, have found little support, as they are aimed at meeting IMF benchmarks that the country cannot afford to deviate from.
The Power Division, during the emergency meetings of the federal cabinet, have similarly proposed providing a one-slab benefit to residential consumers, as per earlier practice, but this is unlikely to proceed as it was withdrawn under a condition of the IMF. The government’s next review of the ongoing $3 billion Stand-by Arrangement with the IMF is due for November, leaving little space for the sought-after relief.
Last week, the government urged the National Electric Power Regulatory Authority (NEPRA) to charge quarterly adjustment charges of Rs. 5.4/unit over six months, rather than the earlier proposed three months, in a bid to reduce the fiscal impact on consumers. However, experts have warned, this merely seeks to delay the inevitable, as the ongoing devaluation of the rupee against the U.S. dollar ensures fuel prices would increase in the coming months, further raising electricity tariffs.
The interim government’s focus on electricity bills has arisen out of nationwide protests over the hefty jump in tariffs, which have seen some consumers’ bills nearly double due to the imposition of taxes and surcharges. Angry consumers have been staging demonstrations in front of power distribution companies, with many burning their bills in protest. There are growing fears of the protests turning into a larger movement for civil unrest, which the caretakers are eager to avoid.