Low-cost electricity essential for stable economy: PM Shehbaz

ISLAMABAD: Prime Minister Shehbaz Sharif has said that his government is solely focused on providing relief to inflation-hit people by reducing the sky-high electricity tariffs as it is linked with a stable economy and competitiveness of exports. 

“Our sole focus is to reduce power prices to provide relief to domestic consumers, agriculture, industry, exports and business sectors. This is inevitable to steer the economy of prevailing issues. The competitiveness of exports is linked with cheap electricity,” the prime minister said while addressing the newly appointed chairmen and board members of the power distribution companies (Discos) on Tuesday.

The statement comes as the government faces criticism from friends and foes alike for approving a massive hike in the power tariffs in line with the International Monetary Fund's (IMF) conditions.

Last month, the National Electric Power Regulatory Authority (Nepra) approved the federal government’s request to hike base tariff by up to Rs7.12 per unit for domestic consumers.

The base tariff was increased for domestic consumers up to Rs48.84 per unit excluding taxes.

However, domestic consumers using up to 200 units per month were given exemption from the recent hike for three months from July to September 2024.

A day earlier, top official sources told The News that the government was making plans for rationalising power tariffs through different proposals including slashing allocation of development budget at federal and provincial levels.

It was revealed that the government is also working on closing down domestic Independent Power Producers (IPPs) belonging to the government and private sectors. However, the IMF has not yet granted its endorsement for the power rationalisation plan, according to the sources.

PM Shehbaz also called low-cost electricity and efficient power transmission system the major factors for a stable economy, adding that the Special Investment Facilitation Council (SIFC) was focused on achieving the said targets.

He told the participants that the government would publicly recognise the Discos members and heads who would put in their maximum efforts to bring improvements, but those failing to do so would neither be spared nor would remain part of the team.

The prime minister said through a lengthy process, the government had appointed highly competent and experienced people in Discos purely on merit by doing away with political appointees.

He said the newly appointed chairmen and members had great challenges ahead which necessitated working hard day and night to purge the Discos of mismanagement and corruption.

He said the power theft had swelled to around annual Rs500 billion mainly due to connivance with the Discos staffers who were also the reason behind destroying the institutions.

“This is the greatest challenge for you. The government has made deliberations about how the system should be improved. You will have to show your best,” Prime Minister Shehbaz said.

He said that the circular debt had touched Rs2,300 billion – almost one-third of the country’s total receipts of Rs9 trillion last year. Can a country be run with such a huge burden?” he questioned.

Also highlighting the issues of line losses and weak transmission systems, he instructed the immediate launch of smart metering in some of the Discos.

He told the meeting that the government was in talks with China to run power plants with a mix of coal to save $1 billion annually.

The prime minister recalled the installation of LNG plants during Nawaz Sharif’s tenure almost a decade ago with 63% efficiency and almost on half of the Nepra tariff which manifested the government’s commitment and willingness to bring improvement.