PAC seeks remedy for post-200 unit billing
The Public Accounts Committee (PAC) on Tuesday took notice of the electricity tariff slab hike that penalises consumers for exceeding 200 units, directing the Power Division to propose a solution for inflated bills that persist for six months even after a single unit crosses the limit.
The committee meeting, chaired by MNA Junaid Akbar Khan, reviewed audit paras related to the Ministry of Energy. Expressing concern, the chair demanded an explanation for the prolonged penalty on consumers who exceed the 200-unit threshold once.
Officials briefed the committee on the status of Independent Power Producers (IPPs), revealing a sharp rise in installed capacity over the years. Committee member Shazia Marri questioned why provinces like Sindh and Khyber-Pakhtunkhwa continue to endure up to 16 hours of load-shedding despite a surplus in electricity generation.
The power secretary informed the committee that 58% of electricity users fall under the 200-unit slab, with subsidised rates now benefiting 18 million consumersup from 11 million previously. He acknowledged the issue of high bills lasting months for consumers who breach the limit once.
"To increase the slab limit, a higher subsidy will be needed," he said, adding that the government aims to reform the system by 2027, shifting to direct subsidies using BISP data.
The Energy Ministry also noted that the installed capacity of IPPs rose from 9,765MW in 2015 to 25,642MW in 2024, with annual capacity payments jumping from Rs141 billion to Rs1.4 trillion.
Committee member Syed Naveed Qamar disputed the Power Division's claim that coal was the main driver of high electricity costs. Meanwhile, Junaid Akbar raised doubts over reports of 200% electricity generation from bagasse, calling the numbers unrealistic.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
Sugar crisis
EDITORIAL: Public Accounts Committee (PAC) under the chairmanship of Junaid Akbar, a Pakistan Tehrik-i-Insaaf loyalist, has sought records of sugar mill owners and exporters to determine the cause behind the escalation in the price of sugar in the domestic market – a recurring cause reminiscent of the boom-bust cycle in the country's balance of payment position that has compelled successive administrations to periodically seek an International Monetary Fund (IMF) loan. The country is currently on the harshest-ever upfront programme – the twenty-fourth in our history, average three years per programme. The root of the recurring problem is as follows: the growers are seen lined-up with their cane outside mills which are, on occasion, not immediately accepted by the mill owners due to reasons ranging from a deliberate delay in the start of crushing due to price disputes, capacity limitations of mills and the middlemen (aarthis) exploiting farmers. Once the cane is accepted after negotiating the price downward, the mill owners begin crushing. The Sugar Advisory Board (SAB), headed by the Minister for Food Security and Research, with provincial cane commissioners and representatives from the politically powerful Pakistan Sugar Mills Association (with 80 plus members) reviews the sugar stocks to determine scarcity and or surplus. The SAB recommends exports to Economic Coordination Committee (ECC) of the Cabinet, the highest economic policymaking forum, only if there is an assurance that there are surplus stocks — an assurance that has been given time and again through data fudging — exports would in no way impact on domestic prices. In several years, allowing exports have been accompanied by a subsidy paid at the taxpayers' expense on the plea that the international price of sugar is lower than the cost to the mill owners. Mid-October 2024, Musaddiq Mailk as Sugar Monitoring Committee chair was replaced with Ishaq Dar who allowed export of 0.500 million metric tons (MT) of sugar, in addition to the already approved 0.140 million MT, based on the following data: 2.054 million MT of sugar was available with 5.465 MT consumed domestically in ten months, 0.900 million MT was projected to be used in the next two months premised on the September data (which was 0.450 million MT – a quantity that was set aside). Failure to allow legal exports, it was argued, would lead to smuggling of sugar across the Afghan border. That this argument backed by trumped-up data was flawed, as in previous years, is evident, given the subsequent rise in domestic prices reaching a high of 210 rupees per kg in Islamabad this week past prompting the Minister for Food Security to publicly propose deregulating the sugar industry as well as lifting a long-standing ban on new sugar mill licences. Would these proposed measures assist in resolving the issue for all times to come? The answer sadly is not positive because it presupposes that sugar operates in the open market where there are too many buyers and sellers to be able to influence market price. This is not the case in Pakistan where most items which are operating in open market conditions in other countries have managed to establish associations duly registered with the Securities and Exchange Commission of Pakistan that allows them to operate in the market as oligopolists (few buyers who collude to set prices) and through their pervasive influence in the country's politics to get approval for exports and export subsidies. In addition, lifting the ban on issuing sugar mill licences, a ban that was violated by the ruling Sharif family during a previous administration, would in all probability allow for even more of a concentration of mills in the hands of a few. This, in turn, may exacerbate the situation. To conclude, the prevalence of associations for products that operate in open market conditions in other countries must be revisited and the Competition Commission of Pakistan strengthened to take up the challenge of powerful influential groups. In addition, the government also needs to revisit sugar as a large-scale manufacturing sector with a weightage of 3.43 in the calculation of large scale manufacturing sector that provides justification for government support. And finally, there is a need to update and delink the data from those whose interest it is to manipulate it. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business Recorder
Rechanneling BISP for greater impact
How do economies grow? By putting their productive resources to the most efficient use. Yet in Pakistan, nearly half of this potential remains underutilized. Women make up 49 percent of the population, but only 21.4 percent of working-age women participate in the labour force. This is among the lowest rates in the world and the region (global average: 52.6 percent; South Asia: 25.2 percent). In stark contrast, nearly 60 percent of Pakistan's female population is enrolled in the Benazir Income Support Programme (BISP), the country's flagship cash transfer scheme for vulnerable, women-headed households. While BISP provides vital short-term relief, mounting evidence suggests an unintended consequence: declining female labour force participation (FLFP) over time. According to the neoclassical household labour supply model, unconditional non-labour income such as cash transfers can reduce labour supply, particularly in the absence of active labour market policies. Over time, such dependency becomes entrenched and increasingly difficult to reverse. With limited fiscal space, governments tend to prioritize short-term relief measures, particularly when it is politically expedient, often at the expense of long-term investment in human capital. This trade-off is reflected in Pakistan's federal budgets. Since BISP has evolved into a robust, data-driven platform, it should be used for more strategic resource allocation by shifting the focus from broad coverage to meaningful impact. To achieve this, two shifts are essential. First, BISP support should be linked to formal, women-friendly employment to break the cycle of reliance and promote women's economic mobility. This requires revising eligibility so that employed women who meet vulnerability criteria still qualify. Support can include disability aid, daycare, transport subsidies, school stipends for children of widowed or divorced women, micro-loans, and one-time grants for major life events like a daughter's marriage. These measures would reduce reliance on handouts and boost FLFP. Second, BISP should help offset cost-of-living pressures that weigh heavily on low-income households. Utility bills constitute recurring burden that often push vulnerable families into debt. Targeted subsidies for gas and electricity, routed through BISP for lifeline consumers, could reduce household stress while focusing fiscal resources on clearly defined eligible groups. However, if the current structure of BISP continues, Pakistan risks pushing its female population into a vicious cycle of dependency, which we must avoid. And here is why. The hidden cost of dependency: The Economic Survey 2025 describes social protection as a 'strategic investment in the nation's future'. Yet without women's participation in formal economic activity, that claim remains open to question. Heavy reliance on social protection affects resource allocation in two ways: it increases the population's dependency on non-labour income and shifts government spending from long-term productivity to short-term relief. The concern is particularly relevant in Pakistan, where 55 percent of BISP's allocation goes to unconditional transfers with limited linkages to employment or skills training. As of 2025, 71.7 million women, or nearly 60 percent of Pakistan's female population, are listed in the National Socioeconomic Registry (NSER), according to BISP's data portal. Of these, 9.87 million are already receiving cash transfers. This means that if BISP were to extend support to all registered women, its budget would need to be more than double, increasing by 2.6 times. At the same time, government spending priorities have shifted. Prior to BISP's launch in 2008, federal allocations for education were higher than those for social protection. Since then, BISP's budget share has steadily increased, eventually surpassing education, which has seen a consistent decline (Figure 1). This shift has long-term consequences. Female literacy, still below 50 percent, limits access to formal employment and creates a cycle: undereducated women struggle to secure jobs, rely on handouts, female labour force participation (FLFP) drops, incomes fall, and poverty deepens. Evidence of a trade-off: Empirical research supports this trend. Majid and Riaz (2022) found that women receiving BISP were more likely to remain out of the workforce or in vulnerable jobs. Sarfraz et al. (2022) observed that early gains in reducing vulnerable employment vanished within five years, with no sustained improvements in work outcomes. An IMF study (Ivanova et al., 2019) found that in societies with strong gender norms, cash transfers can reduce women's willingness to work unless paired with incentives like better pay or job access. This pattern is not unique to Pakistan; cross-country data show that greater reliance on social protection is often associated with persistently low FLFP, particularly in low- and lower-middle-income countries. Figure 2 illustrates that Afghanistan and Iraq, with above-average social protection spending (as percent of GDP), report some of the lowest FLFP rates, primarily due to cultural barriers followed by other contributing factors. In contrast, Bangladesh appears in the top-left quadrant, with relatively high FLFP despite lower welfare spending. Pakistan currently performs below the global average on both metrics, but with BISP spending on the rise (Figure 1), it risks shifting into the bottom right quadrant, where dependence on social protection coincides with low female labour force participation (FLFP). The moderately negative correlation (r = 0.5549) between the two indicators suggests that without a focus on building long-term human capital, social protection systems may inadvertently deter women from joining the workforce. The rarity of countries in the top right quadrant, which achieve both high FLFP and high social protection spending, highlights how rare this balance is in practice. Political will for development outcomes: Social protection is often tied to the broader goal of human development. However, Pakistan's HDI ranking has dropped from 161 to 168 out of 191 countries between 2022 and 2025, with a noticeable decline in women's empowerment indicators. If BISP were meaningfully advancing human development, these indicators would reflect that progress, especially given the programme's rising coverage and increasing share in the federal budget. Instead, the government continues to expand BISP coverage without creating sustainable economic linkages. This has made the trade-off between education, FLFP, and welfare dependency more visible. While the cash transfer of Rs 13,500 per quarter offers psychological comfort, it delivers little meaningful relief. To be effective, BISP must either support sustainable income generation through increased FLFP or ease living costs through targeted energy subsidies. With 60 percent of Pakistani women already registered in BISP's database, the platform could be used to identify vulnerable women-headed households with electricity usage under 200 units per month and offer targeted relief. Such reforms demand political will but would reposition BISP as a genuine tool for long-term development. Returning to the central premise: economies thrive when resources are used efficiently. If BISP is not rechanneled now, Pakistan will face a defining question in the years ahead: Is BISP a 'strategic investment in the country's future' or another misallocation of public resources? Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business Recorder
PM commends Leghari for power sector reforms
ISLAMABAD: Prime Minister, Shehbaz Sharif has applauded Minister for Power, Sardar Awais Leghari and Secretary Power, Dr Fakhre Alam Irfan for their outstanding performance in steering the government's reform agenda in the power sector through a particularly challenging period. In appreciation letters to both the top men of Power Division, the prime minister stated that the reduction of Rs 780 billion in circular debt, bringing the overall stock down to Rs 1,614 billion, was indeed a Herculean task made possible through 'your persistent effort and effective collaboration across institutions.' 'The successful renegotiation of Power Purchase Agreements (PPAs) with more than 35 Independent Power Producers (IPPs), including the termination of six contracts, is a historic intervention. These efforts have resulted in savings of approximately Rs 3.6 trillion for the national exchequer,' stated the letter. The prime minister further stated that the overall tariff reduction of Rs 8.35 per unit compared to the previous year has delivered tangible relief to power consumers, not only easing the burden on households but also invigorating industrial demand, with lasting impacts across multiple sectors of the economy. The introduction of people-centric initiatives such as 'Apna Meter, Apni Reading' exemplifies a responsive and modern approach to governance that will help reshape public trust in the power sector. 'I congratulate you and your team on these commendable strides, and I trust that your continued efforts will further strengthen Pakistan's energy security and economic resilience,' the prime minister added. Copyright Business Recorder, 2025
