ISLAMABAD: In an effort to ease the financial strain on the struggling power sector, the Pakistani government is contemplating ending the provision of free electricity to government officials and agencies, including bureaucrats, judges, and parliamentarians, local media reports say.
Under significant public and political pressure, the federal government has decided to develop an emergency plan within the Ministry of Energy. This proposed plan may also eventually extend to withdrawing free petrol benefits.
The country is grappling with severe financial challenges and a heavy debt burden, making it crucial to take drastic measures to prevent a potential default. The sources noted that increasing the export target to at least $60 billion has become essential.
The plan includes providing electricity only to essential industries and businesses and considering a reduction in Maximum Demand Indicator (MDI) charges for factories. Additionally, a review of the performance of the National Electric Power Regulatory Authority (NEPRA) and the Oil and Gas Regulatory Authority (OGRA) is proposed.
This month, the International Monetary Fund (IMF) agreed to a $7 billion bailout for Pakistan, but raised concerns about high rates of power theft and distribution losses that contribute to the sector’s debt crisis.
Power Minister Awaiz Leghari stated that the government is working to reduce “circular debt”—liabilities accumulated in the power sector due to subsidies and unpaid bills—by Rs100 billion annually.
The power sector has been plagued by high theft and distribution losses, leading to mounting debt. Recent government measures to meet IMF demands, including increasing power tariffs, have negatively impacted poor and middle-class households.
Despite rising summer temperatures, which usually drive-up electricity consumption, annual power use in Pakistan is projected to fall for the first time in 16 years due to higher tariffs.
In December 2023, the government ended the provision of free electricity units to officers in Grades 17 and above within power generation, distribution, and management companies. These officers received a pay raise as compensation for the withdrawal of this benefit.
This decision, approved by the Cabinet Committee on Energy (CCoE) on October 26, 2023, and later by the federal cabinet, took effect on December 1, 2023.
