Uninterrupted power supply!

According to a section of the press, the federal government is deliberating launching a scheme that would provide guaranteed and uninterrupted power supply to wealthy industrial consumers at a considerably higher tariff rate. Just how high it would be has not yet been determined, however the objective of this scheme is praiseworthy as it would achieve a range of economic objectives that are the priority of any government.
These include ensuring that the productive sectors of the economy are not held hostage to shortage of a critical input like energy which, in turn, would no longer compromise Gross Domestic Product (GDP) growth rate with its consequent impact on tax collections as well as on employment opportunities. Statistics reveal conclusively that Pakistan has been grappling with these negative trends for over three years and hence the need for the government to ensure that the country's productive sectors at least have access to uninterrupted power supply.
Economic theory argues that a scarce commodity must be auctioned off to the highest bidder. This explains the economic rationale behind the sale of a work of art, one of a kind, at billions of dollars; or the high rent charged for scarce space, for example in Western countries parking comes at a premium price in areas which are more centrally located and therefore more in demand. There is no doubt that most countries of the world do not regard a utility like energy as a scarce resource.
On the other hand, it is the declared responsibility of a government to ensure that a utility is provided to the people of the country without interruption and at a price that does not seek to maximise profit, as is the motivation of the private sector, but at full-cost recovery. Be that as it may, Pakistan has been grappling with a severe energy shortage for the past three years. And while households are severely inconvenienced by loadshedding, yet what has been untenable from an economic point of view is the appallingly poor performance of the large scale manufacturing (LSM) sector, inclusive of textiles our major exports, that has also led to layoffs.
Those who may argue that higher supply to the rich would be tantamount to reducing available energy supply to households, poor and middle-income, even more than at present, must adopt a more pragmatic approach. The government's continued subsidies to the power sector have neither solved the problem of loadshedding nor indeed have satisfied multilateral donors who argue in favour of a tariff aimed at achieving full-cost recovery that would not only ensure that the cost of each unit of electricity is met by the consumers but also that the relevant entity has sufficient funds to invest in enhancing capacity thereby ensuring that any increase in future demand will also be met. Thus, while selling energy to the highest bidder may not be a policy designed to satisfy those who correctly maintain that it is the government's responsibility to ensure that we all have access to electricity, and it is not a luxury item in most countries, yet it is time to accept the shortfall and take appropriate decisions to ensure that the negative outcome of a significant shortfall is minimised in the short-term.
The question is how much would the LSM be willing to pay to ensure that the supply remains uninterrupted? The tariff must be low enough to ensure that it is economically feasible for the LSM, which in turn, would determine the unit's acceptance of the tariff, thereby ensuring that there would be no layoffs with a commensurate rise in productivity. However to ensure equity it maybe appropriate for the utility to offer the same tariff as offered to LSM to domestic consumers but once again, it must be high enough to ensure that it is not simply not economically feasible for domestic consumers other than the very rich.