I want to share that, the Finance Minister Shaukat Tarin, in a press conference after his return from Dubai, where the scheduled quarterly review with the International Monetary Fund (IMF) staff took place, revealed that a 12 percent increase in power tariff would be effective from January 2010.
The decision to raise electricity tariffs was taken in principle last year in November and was the outcome of negotiations between the IMF and Pakistan - negotiations, which eventually led to the approval of a 7.6 billion dollar assistance package.
There were two areas of concern for the IMF, with respect to the energy sector's performance and the required reforms, as revealed in the Letter of Intent (LoI) submitted by the government to the Fund Board.
Shaukat Tarin has stated that its draft is currently being reviewed by the IMF staff, who may make adjustments, if they deem them appropriate, which would then be signed by Tarin, only if the changes are acceptable. Critics argue that the cash-strapped government would sign on the dotted line, without quibbling on the conditions and would rely on providing justification for non-compliance, as and when, that state of affairs occurred.
Unfortunately, this seems unlikely as the vocal Minister for Water and Power has been quiet recently, as he has failed on his promises, namely to end load-shedding by December this year and to ensure that generation capacity would be increased by 2250-MW. High-energy rates and significant load-shedding is unlikely to appease anyone.
The public is genuinely concerned about the announced rise in energy rates due to the erosion in their real incomes, yet public anger is unlikely to be directed against the government if it can ensure that load-shedding is minimal. We hope that the people will get early relief from all these problems of the increasing rates of different things.
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