AIRLINK 74.92 Decreased By ▼ -0.38 (-0.5%)
BOP 4.91 Decreased By ▼ -0.03 (-0.61%)
CNERGY 4.38 Decreased By ▼ -0.01 (-0.23%)
DFML 40.35 Decreased By ▼ -0.83 (-2.02%)
DGKC 85.70 Increased By ▲ 2.39 (2.87%)
FCCL 22.75 Increased By ▲ 1.10 (5.08%)
FFBL 32.11 Increased By ▲ 0.11 (0.34%)
FFL 9.37 Decreased By ▼ -0.05 (-0.53%)
GGL 10.08 No Change ▼ 0.00 (0%)
HASCOL 6.80 Decreased By ▼ -0.02 (-0.29%)
HBL 113.91 Decreased By ▼ -0.09 (-0.08%)
HUBC 139.35 Increased By ▲ 0.25 (0.18%)
HUMNL 11.98 Decreased By ▼ -0.02 (-0.17%)
KEL 4.87 Decreased By ▼ -0.04 (-0.81%)
KOSM 4.41 Increased By ▲ 0.05 (1.15%)
MLCF 38.34 Increased By ▲ 0.83 (2.21%)
OGDC 132.70 Decreased By ▼ -0.15 (-0.11%)
PAEL 25.13 Increased By ▲ 0.28 (1.13%)
PIBTL 6.57 Decreased By ▼ -0.03 (-0.45%)
PPL 118.30 Increased By ▲ 0.50 (0.42%)
PRL 26.01 Decreased By ▼ -0.05 (-0.19%)
PTC 13.67 Decreased By ▼ -0.05 (-0.36%)
SEARL 57.50 Increased By ▲ 0.25 (0.44%)
SNGP 67.10 Increased By ▲ 0.60 (0.9%)
SSGC 10.20 Decreased By ▼ -0.04 (-0.39%)
TELE 8.11 Decreased By ▼ -0.10 (-1.22%)
TPLP 10.76 Increased By ▲ 0.06 (0.56%)
TRG 62.53 Increased By ▲ 0.13 (0.21%)
UNITY 26.82 Decreased By ▼ -0.22 (-0.81%)
WTL 1.36 Increased By ▲ 0.01 (0.74%)
BR100 7,872 Increased By 26 (0.33%)
BR30 25,354 Increased By 97.7 (0.39%)
KSE100 75,162 Increased By 325.3 (0.43%)
KSE30 24,116 Increased By 111.8 (0.47%)

The Power Minister during the Eid break felicitated the nation for a Rs3/unit respite in electricity tariff – that will last a quarter, at best. The respite is largely because of the previous quarterly adjustment being replaced with the new one and a slightly lower monthly adjustment (see Power Tariff: A quarter’s respite, published on April 1, 2024). Despite the temporary respite, let it be remembered that the average residential power tariff will still be 60 percent higher in April 2024, from a year earlier. Hardly anything to rejoice here.

Worse still is the fact that Pakistan that has long been considered in an “energy poverty zone” is plunging further into that. Pakistan has one of the lowest per capita electricity consumption in the world and the lowest outside of Sub-Saharan Africa. The company Pakistan finds itself in on the metric is the likes of Angola, Congo, Yemen, Sudan, Mozambique, and others. Unfortunately, this is quite a familiar territory for Pakistan – as it routinely gets bracketed with these countries in many other rankings from human development to healthcare access and from freedom of expression to rule of law.

It is quite astonishing that the average consumption per electricity connection in Pakistan sits at a 20-year low, at the least. Yes, Pakistan has had its fair share of problems from terrorism to natural calamities, but the stagnation is unprecedented. All this while, urbanization is believed to be on the rise and Pakistan has one of the highest electrification rates in the region. That the use case for electricity has not gone up in two decades is a telltale sign of how badly Pakistan has lagged behind in prosperity.

What may have caused this? Look no further than the never-ending tariff “rationalization” exercise. And here is where the good news is. While the consumption per capita is close to that of African nations, Pakistan now stands shoulder to shoulder with the likes of the USA, United Arab Emirates, and Singapore on at least one variable of the equation. Pakistan’s effective electricity tariff for use beyond 300 units is now comparable to the likes of the USA, already higher than the UAE, and inching closer to Singapore. Quite a list this. Just don’t mention PPP here.

Talking of which, the next base tariff adjustment of which the PPP (power purchase price, not the purchasing power parity) is the most critical component, promises more agony. This is where utmost respect to ground reality is required for the upcoming base tariff. The one currently in place is devoid of any connection with ground reality, affirmed again and again by mounting monthly and quarterly adjustments, and asserted by none other than the regulator itself.

The only way out of the royal mess is finding ways to increase consumption. With the current and proposed tariff scheme, increased consumption is the least likely of outcomes. Taxes and surcharges account for no less than 20 percent of the electricity bill – and that cannot continue. But such is the sorry state of affairs on the revenue front that energy and POL taxes are essentially the lifeline for the FBR.

The power generation will continue deviating from reference because apparently the purchase plan does not take into account the longstanding constraints of the transmission system. The evacuation from south to north remains a problem, and the constraint sensure that more expensive power plants are operated to avoid nationwide blackouts. A complete disregard for laws also means distribution companies continue to shed load when there is demand available. That is largely because they would rather mask the inefficiencies in controlling losses than ensuring all demand is met, which could lessen the per unit price.

The transmission constraints are not going anywhere soon. It won’t be until 2030 that a meaningful base load from hydel sources gets going in the North. A stagnant (or falling) demand, a broken transmission system, inefficient distributors, an overly reliant federation on electricity taxes, and a criminally low growing economy – are all ingredients that could push Pakistan from energy poverty to new depths. Someone, somehow must put the house in order.

Comments

200 characters
KU Apr 16, 2024 10:20am
Indeed a sorry state of affairs. There is no doubt about incompetence, greedy nature and useless existence of public offices, but what really gets you is the fact that they are allowed to carry on.
thumb_up Recommended (0) reply Reply
Amirah Apr 16, 2024 10:51am
Now this is the kind of analysis which we only find at BR Research. Amazing stuff
thumb_up Recommended (0) reply Reply
Naveed ur Rehman Apr 16, 2024 03:48pm
Govt. needs to invest on transmission and distribution system on war footing basis to bring T&D losses to an acceptable level.
thumb_up Recommended (0) reply Reply
Pakistani1 Apr 16, 2024 04:18pm
Recently read about increasing solar power generation as a priority? What happened?
thumb_up Recommended (0) reply Reply
Az_Iz Apr 16, 2024 06:49pm
In India half the electricity is used by industry and a quarter is used by households.In Pakistan half is used by households and a quarter by industry.
thumb_up Recommended (0) reply Reply
Az_Iz Apr 16, 2024 06:52pm
Households already use half the electricity.Reducing tarrifs to increase consumption for Households will not benefit as much.Better if,all, industries are given lower rates to increase consumption.
thumb_up Recommended (0) reply Reply
Syed Najmul Absar Apr 22, 2024 12:13am
Nothing more can be said than the written on the wall ..... we don't have sincere leafership, they are greedy for their wralth buildup ... and not the nation's status.
thumb_up Recommended (0) reply Reply