EDITORIAL: It seems we’ve all but reached the point where unaffordable energy alone will break the working class, ruin households, bankrupt industry and unravel the house of cards that is the Pakistani economy.
But, then, this is just what to expect when your only hope of avoiding, rather delaying, default is an active IMF (International Monetary Fund) programme, but it just so happens that now these bailouts come with tax-increasing and subsidy-cutting “upfront conditions” that will still deliver the kiss of death to the economy, even without a formal default.
Besides, there’s only so much good any amount of aid money will do if the government continues to avoid the painful process of reforms – making this the classic, textbook case of throwing good money after bad money.
For example, we’ve been hearing for ages that something will have to be done about the nature of contracts signed with IPPs (Independent Power Producers) – maybe renegotiate, since there are precedents, or even just cancel them – but that’s where the ball has stayed since day one. Indeed, just a few days ago, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) once again urged the government to “terminate all agreements with IPPs and produce electricity from cheaper sources to alleviate economic strain”.
Let’s not forget that all this, and more, has been said, suggested, debated and promised a hundred times before, yet not a thing has ever been done.
Meantime, losses have mounted, theft has increased, the circular debt has ballooned, and honest, paying consumers have had to foot the bill, quite literally, for all this inefficiency, incompetence, and downright corruption.
The energy pricing mechanism remains an unfair, predatory, top-down one, households already burdened with historic inflation and unemployment have suffered and continue to suffer like never before, and industry continues to be priced out of the competitive international market.
It’s as if there is a deliberate effort to sabotage production, employment, revenue, and the entire economic cycle. Otherwise, why wouldn’t the government, regardless of any particular party in power at any particular time, ever initiate reforms or at least revise an energy pricing mechanism that insults the very demand-supply based market system that the economy is supposed to embrace and employ?
And let there be no mistake, this attitude – deliberate or otherwise – has brought us to the point where the ridiculous price of energy alone assures economic ruin.
Remember last August, when the caretaker government faced so much heat because energy bills had to be inflated to meet IMF revenue requirements and the whole country came out on the streets? Government servants have the luxury of annual pay rises, etc., but most working class Pakistanis have only seen their jobs lost and/or real incomes downgraded over the last few years of unprecedented inflation and job losses, and now they have to pay bills they can no longer afford to just because the government cannot get its act together and even begin sorting out the energy mess. This way, the future will naturally be worse than the past and present.
Copyright Business Recorder, 2024