Government leaders have for long been talking of providing cheap electricity to consumers but they have not yet been able to deliver on their promise. During the last few years the consumers have suffered badly from an unaffordable electricity tariff.

A few days ago, Power Minister Awais Leghari broke the good news that as a result of ongoing reforms, consumers will benefit from the lowest electricity tariff in this geographical neighbourhood within the next few months. He announced that a series of measures have been taken towards this end, the most prominent among which is the cancellation and renegotiation of old contracts with the Independent Power Projects (IPP), appointments of fresh boards to run power companies, anti-theft campaigns to nab miscreants and defaulters and eliminate corruption at all levels of production, supply and distribution. It is also claimed that the problem of circular debt has been tackled and the losses suffered by distribution companies have shrunk in the first five months of the ongoing fiscal year.

All these are steps in the right direction and are sure to bear fruit. But the main issue is that of consistency and sustainability of reforms on which the government’s record is not very encouraging. Another question is that of right technical decisions regarding the energy mix and import of petroleum at the right price and right time. The power minister, in a speech at the recent International Hydropower Conference, disclosed that only 87MW out of the 17,000MW new power projects planned under the indicative generation expansion plan for the next 10 years will be under the least-cost methodology, while the remaining projects remain overpriced. Although he announced that the government retained the “legal right” to terminate 10,000MW of projects from the planned 17,000MW, which have not yet reached financial close, in a bid to curb out-of-control energy costs, the question arises why in the first place high cost power projects are being planned for the future?

In this connection, a pertinent example is that of the Diamer-Bhasha Dam project, especially the transmission costs associated with the dam, currently estimated at $3 billion, as well as substantial power generation expenses, which if integrated into the tariffs presently in place, would raise the national power rate by Rs5 per unit. In view of this, experts have rightly raised the question whether the project’s potential benefits justify the financial burden to be on consumers.

The stark fact is that over the years successive governments bear the responsibility for the wrong decisions taken, many of which were driven by narrow political agendas and showed gross incompetence in planning. This resulted in the addition of power plants to the system without regard to the load capacity of the transmission and distribution infrastructure system. As a consequence, the country has long grappled with massive capacity under utilisation, with only one-third of the 46,000MW of installed capacity used annually.

The power sector suffers from a host of ills, including inefficient power generation, a dilapidated distribution infrastructure, erratic tariff policies, weak recoveries, widespread electricity theft and, last but not the least, rampant corruption.

It is good that the government has now announced that future capacity additions will be driven solely by  such factors as appropriate technology, actual demand assessment, transmission lines capacity and affordable tariffs. It has also been decided that only projects with the lowest cost and tariff structure will be considered in the future. Another rational decision is that the government would no longer assume all responsibility and risk for power procurement and distribution.

But it is easier said than done. Does the government have the will and grit to walk the talk? The promise of the cheapest electricity tariff in the region is a welcome one but one will wait to see how soon this promise is going to be translated into action to the relief of Pakistan’s harassed electricity consumers. To this end, the government will have to develop the necessary capacity and show determination in taking tough decisions and adhering to them. There are powerful interest groups which have successfully foiled attempts at reform in the past and they will continue to pursue their evil designs. The government must be wary of them.

As proof of the earnestness of its intention, the government should get rid of the IPPs as early as possible. A comprehensive regime of reforms in the sector should include setting short and long term goals for improving efficiency, reducing costs, and fostering fairer competition and transparency. During the last two years unaffordable energy prices have not only overburdened the consumers but also adversely affected the wider economy, raising production costs beyond bearable levels. The situation is no longer sustainable. The remedial measures the government has announced or is contemplating should be put in place without further loss of time.