GP Short Notes # 747, 1 September 2023
After the increase in electricity bills, now on Petrol, Diesel, Sugar and Pulses
On 31 August, the Ministry of Finance announced a new price hike of petrol to PKR 14.91 and high-speed diesel to PKR 18.44 per litre, which aggregates to PKR 305.36 per litre for petrol and PKR 311.84 for diesel. The Ministry of Finance attributed the hike to “the increasing trend of Petroleum prices in the international market and the exchange rate variations.”
Additionally, there has been a rise in the price of sugar, pulses and ghee/cooking oil. The current price for sugar stands at PKR 172 per kg with some retailers selling at PKR 185. Furthermore, there has been an average PKR 20 per kg rise in price for pulses as the imports stand costly owing to the depleting values of Pakistani currency. A hike in cooking oil and ghee prices is observed with the jump in palm oil rates.
What does the hike mean?
The shift in the petrol and diesel price will largely affect the transport sector with trains, trucks, buses and tractors which heavily rely on diesel and it would in turn reflect on the cost of vegetable and other foods. Whereas the hike in petrol will directly hit the middle class and lower middle classes as it would become costly to sustain and use private vehicles, rickshaws and two-wheelers. With the rising cost of pulses and food grains can directly affect the ongoing food crisis with Pakistan already on the 99th position under Global Hunger Index, the current hike might lead to further the exasperating the condition.
What has been the government response?
On 31 August, Interim Prime Minister Anwaarul Haq Kakar stated that the people would have to pay their electricity/ utility bills as there is no way around it. He blamed the previous governments from 30 years prior for the economic crisis and that they planned to announce a relief package for the consumers. When asked about the IMF conditions he stressed that Pakistan will fulfill all conditions “at any cost” and that they refuse to deviate from it.
Additionally, Kakar explicitly blamed the severity of the issue on the unregulated contracts signed with Independent Power producers (IPPs) in the 90s to increase power production, where now they have to pay the surcharge. He stated that: “Our power structure remained dependent on fossil fuels and imported fuel. Whatever we were doing was on foreign reserves [in dollars] and that is impacting our other governance aspect.”
On the demand to remove the free electricity benefits enjoyed by the government’s legislators, judiciary and executive, Kakar said that it is not entirely true where the Army does not consume a single free unit and that they pay from their budget. With the judiciary as well he claimed, it was not the same as it was portrayed and it was only the Water and Power Development Authority (Wapda) few employees that enjoyed the free units.
On 31 August, Pakistan Railways Chairman Mazhar Ali Shah announced that they plan to shift to solar power for field formations, encompassing stations and workshops. The first phase is set to include the transition of major railway stations, nine divisional headquarters and other officers which is aggregated to save PKR 1.8 billion. Additionally, owing to the energy crisis and the protest against the hiked electricity bills the Pakistan Railway’s management has decided to prohibit the usage of air conditioners before 11 am every day by the officers.
What are the social responses?
On 28 August, protests engulfed Pakistan from days prior against the hike in electricity prices. The protests kickstarted after the National Electricity Power Regulatory Authority announced that they were pushing the tariffs to PKR 4.96 units as a condition demanded by the IMF. Due to this, there has been an unrealistic hike in bills which has led to traders, businessmen and civilians taking to the streets. Several have demanded the removal of taxes from the bills and a petition was filed in the Supreme Court for the same with the removal of free electricity benefits enjoyed by the government elites. Since the protests the interim government has promised to come up with relief measures after it has been consulted with the IMF.
On 28 August, Jamaar-e-Islami (JI) staged a women's protest against electricity prices where they demanded relief from heavy taxation of the bills. Naeemur Rehman of Karachi Ji Emir Hafiz expressed that the current caretaker government is giving the people the cold shoulder due to which the mothers and sisters are compelled to take to the streets. Muttahida Qaumi Movement-Pakistan (MQM-P) stood against the ongoing protests stating that they support the traders and businessmen but they should follow some restraint.
An editorial in The News International falsified interim PM Kakar's statements that only Wapda’s employees enjoy free electricity benefits. the author clarified that the serving and retired judges from the Supreme Court and High Courts get free electricity up to 2000 units. Additionally, serving President and Prime Minister enjoy unlimited benefits and free electricity benefits.
Another editorial in Dawn, ‘Inflation and desperation’ looks into the real impact of soaring inflation, currency depreciation and the hike in prices to be faced by the lower to middle-income groups. The author found that many civilians have resorted to desperation where they are asking for help from strangers, the only difference between them and the vagrant on the street is that, they are full-time workers who are unable to make ends meet owing to exorbitant rise in prices.
Khaleeq Kiani, “Fresh hike takes petrol, diesel beyond Rs300 per litre,” Dawn, 1 September 2023 Erum Zaidi & Saif Ur Rehman & Shahid Shah, “Already under fire over rising inflation, govt allows massive hike in petrol, diesel prices,” The News International, 1 September 2023
Aamir Shafaat Khan, “Consumers punished with more hikes in sugar, pulses rates,” Dawn, 1 September 2023
Syed Irfan Raza, “Consumers have no option but to pay bills: PM,” Dawn, 1 September 2023
“Power bills issue being exaggerated, insists PM Kakar,” The News International, 1 September 2023
Khalid Hasnain, “Railways to shift field formations to solar power,” Dawn, 1 September 2023
Faisal Bari, “Inflation and desperation,” Dawn, 1 September 2023
Ansar Abbasi, “Who misled PM Kakar on the free electricity issue?,” The News International, 1 September 2023
“MQM-P opposes strike call as JI holds women’s protest against inflated power bills,” The News International, 1 September 2023