ISLAMABAD: Caretaker Prime Minister Anwaar-ul-Haq Kakar said on Thursday that the government would come up with a policy to provide relief on the soaring electricity bills “within 48 hours” that have triggered nationwide protests as Pakistan grapples with an economic crisis.
Enraged citizens have taken to the streets in many parts of the country from Saturday after last month’s move by the country’s power regulator, the National Electric Power Regulatory Authority (NEPRA), to increase the electricity price by Rs4.96 per unit last. The decision has resulted in soaring electricity bills for power consumers across the country.
The power tariff was hiked as part of a condition imposed by the International Monetary Fund (IMF) in return for a $3 billion bailout package for the South Asian country. It came as inflation in Pakistan eased to 28.3 percent in July after reaching a historic high of 38 percent in May, though it continues to remain significantly elevated.
Speaking to journalists and reporters at the Prime Minister’s Office (PMO), Kakar highlighted the various issues plaguing Pakistan’s electricity transmission system and recovery system. He pointed out how Pakistan had not invested in harnessing hydro power or constructed dams but instead, relied heavily on fossil fuels which were procured through foreign exchange reserves.
“We have summoned all our stakeholders and not only have we mulled over policy options, we have thought about it and within 48 hours, we will come up with a policy also,” Kakar said.
The prime minister said Pakistan’s armed forces were not consuming a single unit of free electricity, adding that they “contribute and pay bills against each and every unit which they consume and they pay from their budget,” adding that the same was the case with Pakistan’s judiciary. He said only employees from grades 1-16 of the Pakistan Water & Power Development Authority (WAPDA) public utility company were availing some free units of electricity.
Kakar spoke of Pakistan’s agreements with international financial institutions, ruling out categorically that Pakistan would not deviate from the conditionalities it had agreed to with these institutions.
“In a free market, obviously we have conditionalities [imposed on us], we have agreements with multi-financial institutions that we have to fulfill at any cost,” Kakar said. “Neither is anyone thinking of defying them nor will we allow them to. We are very much clear on that.”
The development takes place amid a bloodbath at the Pakistan Stock Exchange (PSX) earlier today, Thursday, which shed 1,242 points over what analysts said were fears of a possible hike in interest rates and the weakening rupee.
“The stocks fell sharply due to economic uncertainty amid a slump in rupee and speculations over a likely hike in interest rates on inflation worries,” Ahsan Mehanti, CEO of Arif Habib Corporation, one of Pakistan’s leading business groups, told Arab News.
Mohammad Sohail, CEO of brokerage firm Topline Securities, attributed the sharp depreciation of the rupee to an intervention by the central bank and a delay in inflows expected from friendly countries.
“Another reason is the uncontrolled open market where the difference has increased and needs administrative measures to stabilize,” Sohail told Arab News.
Women activists of Pakistan's Jamat-e-Islami party shout slogans and hold placards reading, "The whole nation demands to cancel the license of K electric" during a protest against the surge in electricity prices along a street in Karachi on August 31, 2023. (AFP)
Meanwhile, widespread protests against soaring electricity bills intensified on Thursday as various trader associations in different cities including Rahim Yar Khan, Sukkur, Bahawalpur, Quetta, Vehari, and Peshawar observed a shutter-down strike to force the government to decrease electricity bills.
“Meeting regarding the country’s economy was held under the chairmanship of caretaker Prime Minister Anwaar-ul-Haq Kakar,” the Prime Minister’s Office said in a statement about one of many meetings the PM has held in recent days to devise a strategy on dealing with the protests.
On Sunday, Kakar had promised relief to the masses within 48 hours but no relief plan has as yet been announced.
Media widely reported on Thursday that the government had shared a relief plan for power consumers with the IMF with assurances that the Fund’s agreed targets would not be breached. One proposal is to use an emergency allocation of Rs250 billion in the budget for 2023-24 to provide relief to power consumers.
Expressing helplessness over inflated electricity bills, caretaker Finance Minister Dr. Shamshad Akhtar told senators on Wednesday the fiscal position was so tight under the IMF agreement that there was no money in the coffers for a subsidy.
In her maiden appearance in the upper house of parliament, she presented a bleak economic and financial outlook as she briefed the Senate Standing Committee on Finance.
“I have inherited the IMF program, tied up under a structural benchmark, signed by the predecessor government,” the finance minister said.
“It’s not the IMF about which I am worried, but I am worried about the political and economic stability of the country. There is no other choice but to continue with the IMF program for keeping dollar inflows intact from bilateral partners, which is totally tied up under the IMF program.”
