Pakistan is drawing up a strategy to reduce power tariff after nationwide protests against rising electricity bills over the weekend, a move that was agreed with the International Monetary Fund for a $3 billion bailout.
(Bloomberg) — Pakistan is drawing up a strategy to reduce power tariff after nationwide protests against rising electricity bills over the weekend, a move that was agreed with the International Monetary Fund for a $3 billion bailout.
Interim Prime Minister Anwaar-ul-Haq Kakar told the government officials to come up with steps to reduce the power bills, according to a statement by Prime Minister Office on Sunday. Kakar called the meeting after mass protests and said the government will not take any decision in haste that can harm the nation’s finances. Pakistan unexpectedly froze fuel prices last year that stalled the IMF’s loan program.
The protests over electricity bills is the first challenge for Kakar’s two-week old caretaker administration, which was installed as a constitutional requirement to supervise national elections in three months of the dissolution of Parliament in early August. The previous government of Shehbaz Sharif agreed with the IMF to raise taxes and power prices in June for the bailout that helped the nation avoid a default. Any change in electricity prices can stall the program.
“Pakistan is part of an international agreement and it has to adhere to it whether it likes it or not,” Kaiser Bengali, an economist who has advised multiple previous governments said by phone. “It doesn’t go well that we sign and then default on that agreement.”
People have taken to the streets in various cities of Pakistan to demand relief from the latest increase in electricity prices after dealing with record inflation that is the highest in Asia. Television footage shows people setting bills on fire and consumers scuffling with officials from power distribution companies.
One distribution company ordered its employees to remove its distinctive green-colored government license number plates from their vehicles to avoid possible mob attacks, newspaper Dawn reported.
Pakistan’s average electricity tariff has increased by 76% in about a year as it has committed to regular adjustments with the IMF. the government has to raise power prices to make up for a drop in the rupee that has weaked by almost 5% againstg the dollar in August to a record low.
“Energy prices have become totally unbearable for even middle class,” Musadaq Zulqarnain, Chairman at Interloop Ltd. said on X, formerly known as Twitter. Successive government’s failure and flawed energy policy has contributed to the disaster in the energy sector., he said.
(Updates with comment in the fourth, eigth paragraph, details in the sixth)
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