EDITORIAL: Finally, the prime minister has announced a power relief plan, ‘Bijli Sahulat’ package (a euphemism for ‘winter package’), offering reduced electricity rates to consumers with a view to encouraging them to make increased use of electricity during low-demand winter season. The government has also announced that the reduced rates will be offered to domestic, commercial and industrial consumers from December 24 until February 2025 “in an effort to manage seasonal electricity demand and drive economic growth”.
Earlier, a comprehensive report by this newspaper had highlighted conflicting claims about the package, which was meant to enhance domestic demand and reduce capacity charges, given that there has been a substantial decrease in demand of about 10-12 percent in the industrial sector with 8 percent average decline due to higher electricity tariffs in addition to shifting of industry, commercial and domestic consumers from grid to net metering.
Going by the many different accounts so far, it seemed the good news of an imminent tariff cut was leaked to the public without proper confirmation from the IMF (International Monetary Fund). One of the theories doing the rounds was that a team comprising officials of power and finance divisions held an online meeting with IMF officials, who then raised questions about the projected rise in consumption, as would be expected, as well as its impact on revenue; but they’ve only agreed to a three-month package, from 1 December 2024 to 28 February 2025.
Another theory was that the government never asked for a five-month package and only requested one for three months, and talks were now in their final stages. But yet another theory claimed that the government never intended to include residential users in the package in the first place, and the plan envisaged a possible reduction in subsidies for households to offset the cost of the industrial package.
Now it turns out that the Central Power Purchasing Agency-Guaranteed (CPPA-G) had put final touches to the ‘winter package’ in light of data received from power distribution companies (Discos) a couple of days ago. And that raised a couple of important questions of its own.
One, if talks with the Fund were already underway, and CPPA-G was still analysing data coming out of Discos, was it also shared with the lender before the announcement of the ‘winter package’? And two, who would bear the subsidy of the proposed package, since the finance division had reportedly made it crystal clear that any subsidy outside what had been budgeted was out of the question, according to the understanding reached with the IMF? Concluding, the situation would not have become so confusing if the government had proposed the package in time. Last but not least, the delay in the announcement of ‘winter package’ was expected, it is highly disappointing nevertheless.
Copyright Business Recorder, 2024