Pakistan Bureau of Statistics (PBS) has attracted a fair bit of criticism of late. There have been longstanding issues with the credibility of the data compiled by the PBS, primarily at the collection stage. But the issues keep surfacing around computation methodology even after the rather extensive rebasing exercise.
The PBS’ treatment of energy prices continues to be questionable, despite having made considerable improvements compared to the previous methodology. The shift to using weighted average tariffs according to consumption quintiles and making room for periodic adjustments were welcomed when the rebasing happened. But the prices reflected in the CPI computation are still divorced from reality, which is unfortunate.
The PBS reported 11.4 percent year-on-year increase in electricity charges for August 2020. The actual change was more than double at 25.5 percent. Eyebrows should have been raised in a parallel world where data is valued more than just fillers for news stories and bulletins.
Recall that after a long period of electricity price freeze, the government finally allowed monthly Fuel Charges Adjustment (FCA) pertaining to eight months from November 2019 to June 2020, to be collected in August and September. Now, one might think that the PBS should have the bases covered, especially after including monthly FCA in its tabulation methodology last year amid much fanfare.
So, what did the PBS miss? While the FCAs are accounted for, it appears the statistics body does not differentiate between positive and negative adjustments. It is a fine point, yes, but one that has been around ever since the FCAs were first introduced. The negative monthly FCA does not apply for consumers using up to 300 units, which is 78 percent of the total consumption.
The PBS seems to have erroneously calculated the August and September FCAs at Rs1.7 and Rs1.1 per unit, which only apply to consumers in the last two slabs - those consuming 300+ units. The upward adjustment for the slabs up to 300 units was Rs2.42 and Rs2.86 per unit - for August and September, respectively. Mind you, negative FCA adjustment is not a rare occurrence either. If the PBS continues to ignore this, electricity prices will continue being underreported.
Hopefully, the Bureau would be more responsive to changes, which do not require changes in consumption weights, and only a tweak in methodology. Earlier, when the PBS was pointed at for not making FCAs a part of methodology, the response was on the lines of “it is difficult to change it midway”. One hopes the response would be different this time.
Not that this is about the only thing that the PBS does not do right about recording energy prices. The PBS does not take into account the fact that the consumers still enjoy the benefit of one previous slab. The average national tariff as computed by the PBS is overreported by at least a rupee per unit. It does not have that big an impact on CPI, as the change still falls pretty much in line with the actual price. But what if the slab benefit is taken back or increased to more slabs?
Even the gas prices are recorded without the benefit of previous slab, which led to incorrectly high base for gas prices last year. The PBS would do well to record prices more realistically, at least for sectors as well documented as gas and electricity.