It appears the masses have finally had it. The protests over electricity bills may well be sporadic and leaderless – just yet, but it won’t be long before it turns into something too big to handle. The caretakers are caught in the crossfire, whereas all political parties who have been part of the government in the last 15 years are demanding relief. There is funny and then there is this.

This section has repeatedly warned of the dire consequences of overly relying on revenue measures in the disguise of sector reforms, and the misplaced euphoria on energy availability without affordability. This was designed to backfire at some point. Pakistan’s dire straits in the last year or so that gave the IMF the upper hand is proving to be the final nail in the coffin. Unprecedented upwards tariff adjustments made at the time of possibly Pakistan’s worst economic crisis – was only destined to have one outcome.

The power sector affordability problem is a two-part problem. One relates to the technical and financial inefficiencies within the system, on which a lot has been said and written. And the other is the fiscal side of the country itself. Pakistan’s tax authorities’ royal incompetence is such that all governments stress on taxing consumption to the fullest and when it is a utility as essential as electricity, they deem fit to levy all other kinds of taxes, that they would otherwise struggle to collect.

While the system’s health would be compromised in case of a mismatch between generation cost and price – letting go of some taxes would not be a direct strain on the financial health of the entire chain. Nearly one-third of the consumers’ electricity bills constitute of various surcharges, duties, taxes, and more duties. So much so that electricity bills above a certain threshold are now even used to collect income tax. Given how a vast majority of urban polity live in rented premises – with a large chunk invariably not having the connection in their name – they end up paying a sizeable amount just because the house owner in most cases happens to be a non-filer.

The machinery’s abject failures to formulate right policies and to collect due taxes, should not be a penalty on honest paying consumers. Mind you, the ones who pay already pay the cost of those who do not. They are already paying for the inefficient handling of the circular debt, the loan to service which is now being paid by the consumer in the form of a surcharge that is levied across the categories, without exception – and in no small amount.

Yesteryears’ oversight on hasty capacity additions cannot be brushed aside either. Capacity payments are a big drag and must not be belittled. For a country where the currency is almost always facing tailwinds – such lenient tariff indexation was always going to return what’s happening today. It feels much worse because of the general inflationary scenario, negative to stagnant economic growth and shattered purchasing power. That said, there is very little that can be done on that front, other than finding ways to increase consumption.

And herein lies the other big problem. Pakistan’s use case for every electricity consumption has stayed stagnant over the past 13 years. Everywhere in the world, and in comparable countries in the region, average usage per connection has grown steadily – by as much as 50 percent in some cases such as Bangladesh’s. The failure to ensure energy affordability is a big reason for stagnant energy usage. And with Pakistan’s electricity tariffs so heavily pegged with the USD – achieving any export competitiveness with ever-rising tariffs – is next to impossible. It becomes a chicken and an egg problem – as pressure on exports then becomes pressure on capacity payments and the cycle goes on.

And the less said about the under recovery and T&D losses – the better. Pakistan’s losses are twice that of Bangladesh. They were comparable less than a decade ago. It is nothing that has not been done elsewhere. Privatizing discos never appears to be on the agenda beyond lip service. Even for the ongoing fiscal year – nothing has been earmarked for discos’ privatization. The IMF too, seems content with it, as long as tariffs keep rising.

A country where tax collection is barely 10 percent of GDP – and energy circular debt is touching 6 percent of GDP – not having a complete collapse of the system is a mini miracle in itself. The leakages have to stop – from billions lost in tax revenue and indirect adverse impact on currency via smuggling to and from Iran and Afghanistan to the inability to have an equitable income tax system in place.

Pakistan is on the brink yet again. It is not the caretakers’ job to take big decisions, which is where the need to have timely elections becomes even more important today than ever. The country needs a serious overhaul in how it is run, and for that, people’s representative must be at the helm as soon as possible. One hopes the ongoing crisis does not become the raison d’etre of the caretakers taking care of the country for much longer than they are stipulated.