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The proposed electricity hike is based upon rebasing the per unit rate by up to Rs5 at a time when the Power Purchase Price (PPP) payments are expected to reach over Rs3 trillion during the next fiscal year, sources said.

And this additional burden on consumers is again a direct product of devaluation – a trend fully advocated and stressed upon by the International Monetary Fund (IMF) – with the inflation already reaching a record-high level.

Read more: UN steps up criticism of IMF and World Bank for benefitting rich nations

This proposal is based upon an assumption that the US dollar exchange rate will jump to Rs382 during the last quarter of next fiscal year 2023-24 against the Rs180 or Rs190 assumed for 2022-23. And increased revenue demand – Rs600 billion – made by the power distribution companies (Discos) for 2023-24 is the other factor.

Devaluation – along with less recovery by Discos) and line losses – has also propelled Pakistan’s circular debt to Rs2.5 trillion due to massive devaluation of Pak Rupee. It is estimated that the circular debt is growing by Rs500 per year after the PTI assumed power in 2018.

The thinking behind this proposal is that the Power Purchase Price has to be revised regularly while keeping in view different elements that affect the prices, which besides devaluation also include addition in power generation capacity, change in fuel prices, variation in interest rates and CPI (Consumer Price Index).

So the IMF’s demand to go for higher key policy rate [interest rate] – along with devaluation – is putting additional burden on the masses, if subsidy not provided, or on the national exchequer, if the tariff is subisdised, at time when the world’s top lender is claiming that its focus is on broadening the tax base [direct taxation] and enhance revenue
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