Energy prices

It doesn’t seem like inflation will leave us any time soon. One could be forgiven for believing government officials when they say that they want to control rising inflation. But each step taken confirms the opposite. High inflation seems to be policy across all consumables, with much of it driven by the increase in energy costs. On Tuesday, the government announced the price of petrol would increase by Rs2.61 per litre. Similarly, the price of high-speed diesel will increase by Rs2.25 per litre. This brings the fuel price hike under the PTI to almost 20 percent in a year and a half. The time when current Prime Minister Imran Khan used to sit in the opposition and criticise every petroleum price hike with vengeance is long since over. And this hike came before the US-Iran crisis erupted on Friday (which could lead to a global surge in oil prices). How long the public will continue to keep bearing this assault on their livelihoods is to be seen. Till now, it seems no one has reached a tipping point, but certainly the despair is showing in the state of the economy.

No one will be thrilled to hear that the government has issued two more price increases too: first the price of LPG has been increased by Rs23.54 per kg to raise it by over 15 percent. Then, the power rate for K-Electric was increased to Rs17.69 per unit, much higher than the average sale rate of Rs12.91 per unit paid by consumers. There are few who will believe K-Electric’s claim that consumers will not be the ones to bear the burden. The decision to change the rate took place based on an assessment of fuel adjustment charges, which one would not be surprised to learn was decided in KE’s favour. The impact of the price increase comes to around Rs106 billion, out of which Nepra officials say consumers would have to bear around Rs15-20 billion. The fact that clarification has been needed over whether this means an immediate increase for K-Electric customers is not unjust.

Eventually, it is hard not to see the amount being charged to the public. If it is not, then it would go against everything that the government is claiming to do in terms of curbing deficits. Right now, the government has claimed it will pay the tariff differential as subsidies, which is something that continues to make no sense to keep a privatized electricity provider afloat. Given uniform tariffs across the country, the price difference will likely be transferred onto all consumers in the country. There is little to be hopeful for on the inflation front with news like this.