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Protests in Pakistan: Why electricity bills in the country have soared

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Several cities in Pakistan have recently witnessed protests over high electricity bills. Peshawar, Karachi, Lahore, Multan, Rawalpindi, have all seen people blocking roads, burning tyres and chanting slogans against the hiked electricity charges, which have brought hefty bills for the month of July for households and businesses.

On Tuesday, the country’s interim Information Minister, Murtaza Solangi, said the Energy ministry had finalised a list of proposed measures to provide relief to the people, and this would be presented in a federal cabinet meeting for approval.

Two days ago, the caretaker Prime Minister, Anwaar ul Haq Kakar, had held an emergency meeting and directed authorities to take “concrete steps” within 48 hours for a cut in the power tariff. In Pakistan, an interim government takes charge between the dissolving of the last government and the conduct of fresh elections.

Kakar on Sunday said he represented “the common man”, and measures would be taken to minimise electricity consumption at the PM House and the Pakistan Secretariat. For this, he added, “even if the air conditioner in my room has to be turned off, do it.”

What led to the massive power tariff crisis in Pakistan, what has the reaction been, and what steps is the government planning?

The power bills, and the protests in Pakistan 

The protesters have refused to pay the exorbitant electricity bills for July, saying they were already struggling amid high inflation and high unemployment, and experiencing high load-shedding to boot. The massive bills will deal a crippling blow to many businesses, trade unions have said.

The Jamaat-i-Islami (JI) has announced a nationwide strike on September 2 over the power tariff issue.

According to the Pakistani news agency Dawn, average electricity cost has “more than doubled for low- to middle-class households since May”.

Why have the power bills gone up drastically?

The hike has mainly to do with the conditions Pakistan agreed to for a $3-billion bailout by the International Monetary Fund (IMF) in June. Under a host of regimes to boost fiscal discipline, the IMF has asked Pakistan to shore up tax revenue. The bailout deal could be signed only after eight months of tough negotiations.

Kristalina Georgieva, Managing Director and Chair of the IMF, said in a statement after the deal, “The anticipated improvement in tax revenues is critical to strengthen public finances, and to eventually create the fiscal space needed to bolster social and development spending…In parallel, the authorities urgently need to strengthen energy sector viability by aligning tariffs with costs, reforming the sectors cost base, and better-targeting power subsidies.”

Thus, in July, power tariff was hiked at different rates for different categories of customers.

Apart from the IMF deal, another reason Pakistan’s authorities have cited is the elevated international energy rates in June.

But there are other, structural problems at play. As an editorial in Dawn said, “The bad news is that electricity prices in the country will continue to climb even after a downturn in international fuel prices as long as there is no move to undertake long-standing power sector reforms in order to sharply cut system losses, control the allegedly rampant corruption in the distribution companies, stop widespread power theft by the powerful, and, more importantly, reduce reliance on imported fuels by shifting to local fuels for generation and encouraging renewable energy.”

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