he Punjab government’s two-month dole-out for mid-level power consumers has been welcomed by most consumers likely to benefit from it.

The monthly power bills have become a major burden for many. Many people are finding it difficult to pay hefty electricity charges of a more humid than usual summer. The electricity bills now account for a larger portion of household budgets. Some low-income families have complained that they leave no resources for essential expenditures.

Domestic electricity tariff has leapfrogged to unprecedented levels. According to one assessment, the domestic tariff is now more than twice that in Bangladesh and India. This is particularly hard for people already reeling from high inflation and stagnant wages who have lost a significant part of their purchasing power.

Every other day, there are heart-wrenching reports of disputes and violent actions prompted by high utility bills. These have included extreme actions like attempted murder and suicide.

The high cost of electricity can prove a tipping point causing a humanitarian crisis of far bigger magnitude than visible in the short run. If effective remedial measures are not taken, the rising cost of electric power and the exploding natural gas tariffs over the winter months are going to break the back of many in the vulnerable classes and add to the extreme poverty.

After street protests and demonstrations by various groups, the federal government has decided to explore options for reducing the burden on the power consumers.

From among the political parties, Jamaat-i-Islami under its new leader Hafiz Naeem has taken the lead by organising a protest campaign in an orderly manner. Concerns have also been voiced by several traders’ organisations.

Later, Nawaz Sharif, the former prime minister and Pakistan Muslim League president, announced a relief package for domestic consumers billed for 201 to 500 kWh. Their effective electricity tariff will be cut by Rs 14 per unit for the months of August and September. The subsidy will cost the Punjab government Rs 45 billion. Sharif and spokespersons for the provincial government have said the amount will be raised by ‘rationalising’ the budget estimates for the current financial year.

Can the subsidy have a negative impact on the arrangement with the International Monetary Fund? A review of the government’s performance by the IMF experts is still pending. The loan agreement with the Fund staff too is subject to approval by the IMF’s executive board.

According to an economist, the Punjab government’s subsidy for the power consumers in the province will not alter revenue and expenditure estimates for the financial year.

According to an economist The News on Sunday spoke to, the Punjab government’s subsidy for domestic power consumers in the province has nothing to do with the IMF loan as it will not change the revenue and expenditure estimates for the financial year. He said the Punjab had reprioritised its budget outlay to accommodate the subsidy out of its already documented resources.

There is also the question whether the subsidy is worth it? It will provide immediate relief to a large number of lower-middle income households. In the best case it could cut their monthly power bills by almost a third.

It has been suggested that some alternative measures could have been as effective or more beneficial.

A LESCO official says the Rs 45 billion could have been used to install two million smart meters. This could cut substantially reduce overbilling and corruption.

A similar project is being currently executed by the Islamabad Electric Supply Company.

The distributions companies could also introduce prepaid meters to deal with the problem of frequent or chronic default on payment of bills.

Several government and independent entities are currently working on recommendations to make the electricity more affordable for the Pakistani consumers. The medium to long term economic performance of the country might depend on the outcome of their work.

The Punjab government could also take the lead and take over the administration of the distribution companies serving the areas that fall in the province. Should the government be able to eradicate corruption and theft and cut the losses, it may be possible to provide more sustainable relief to the consumers. Is the chief minister game for the challenge?

The writer is a senior reporter at The News.