The government was actively considering cutting high electricity rates in Pakistan

Feb 23 - 29, 2004



The electricity and the POL products are considered as the engine of economic growth in the today's world.

Despite having a strong manufacturing base, the developed economies never allowed the price of the electricity and POL products to go beyond a certain limit to refrain from any adverse impact on investment climate, competitiveness of the existing industrial sector and above all the living standards of the people.

Unfortunately, this is not being practiced in our case and the utility services are being used as the revenue and tax collecting agencies rather than using them to facilitate the economic growth and improving the living standards of the people.

It was policy of the government in early 90's to enter into power purchase agreement with Independent Power Producers (IPPs) which played havoc on our social and economic life due to adverse impact of high cost of power on the general prices. Consequently, the purchasing power of the common man was severally hit besides it proved as a stumbling block to our economic growth.

It was the electricity price which stalled investment in the manufacturing sector, which was the only major source of providing job opportunities to the skilled and non skilled work force at a massive scale in Pakistan. However, it was the cost of electricity which closed down the doors for job opportunities to the people thus adding to the economic sufferings of the people.


The government was actively considering cutting high electricity rates in Pakistan. The task force and the committee set up by President General Pervez Musharraf to evolve recommendations for reduction in electricity rates have prepared their recommendations. The decision to cut in power rates is being taken in the light of the recommendations of these two bodies. Informed sources were of the opinion that one of the government levies such as fuel adjustment charges or additional surcharge on the consumption of electricity may be done away with prior to the federal budget for 2004-05.

In fact, the reduction in power price has become imperative in the face of implementation of WTO rules due on January 1, 2005 which would lead to an open competition in the world export market.

In that situation, survival for the fittest will be the name of the game.

Another major development in the Karachi Electricity Supply Corporation (KESC) system is its shifting from fuel oil to natural gas bringing a major cut in the cost of power generation. Similarly, WAPDA has also succeeded in switching over a large portion of its thermal generation from oil to gas which has been gifted by almighty Allah to the people of this country. On the other hand, WAPDA which is largest power producing company in Pakistan has recently added Ghazi Brotha Hydel Power project to its strength. Moreover other hydel and coal-based power plants are also in the pipeline in collaboration with the friendly country of China especially at Thar coal field and Lakhra. New power generation units were set up in both the public as well as private sector, the installed capacity of electricity generation increased from 13.0 Giga Watt in 1996 to 17.4 GW in 2000 and subsequently to 18 GW in 2002. The increase in the installed capacity of the country during the last two years was brought about by the addition of Chashma Nuclear Power Plant 325 Mega Watt, Chashma Hydropower Project 184 Mega Watt and Liberty power 235 Mega Watt. Besides the addition in hydel and nuclear capacity, China has also joint hands in the coal-fired power generation under which two coal fired units of 350 Mega Watt each are also planned at Lakhra and Thar coal fields.



All these positive developments have placed the present government in a position to give the happy news to the people of this country who are paying then price of the folly of the previous governments. It is funny that the electricity in Karachi is being produced on gas fired system, yet the consumers are being charged with fuel adjust charges. They have to pay surcharge, additional surcharges and other government levies.

All these levies on different essential items were imposed as corrective measures for improving the macro economic fundamentals of the country.

The economy has come out the crisis of 1990s, exports target for the current financial year is well within reach, reserves have cross the mark $12 billion, the government has overcome the losses it had to suffer on account of state owned corporations, as major public entities have already been privatized and the remaining are on the cards. KESC which was running in huge losses has also managed to overcome its losses by effective recovery, control on power thefts and other financial discipline which have raised the hoped for the KESC management to become a profit making company in the years to come. The people of this country are waiting for the happy news as recently indicated by the minister for power for a cut in the power rates.


The task force on electricity and the committee appointed by President General Pervez Musharraf have finalized their recommendations for reduction in electricity prices.

Informed sources were of the view that electricity rates for the consumers in Karachi would be brought at par with the rest of the country. Since KESC has shifted its power generation system from fuel oil to natural gas, there seems no justification for carrying on the Fuel Adjustment Charges (FAC) levied on electricity consumption in Karachi. The announcement for reduction in electricity rates may be announced prior to the Federal Budget in June next.