"The cost of electricity reflects the toll of mismanagement on our society."

 "The cost of electricity reflects the toll of mismanagement on our society."

"In September 2023, the decision to increase the base electricity tariff by 25.5 percent led to widespread protests as August bills surged for millions of consumers. The soaring electricity prices can be traced back to a series of issues stemming from mismanagement within the power sector.

Firstly, including indirect taxes in electricity bills has become a coercive measure due to the government's inability to collect taxes from influential elites. These levies burden countless households.

Secondly, losses within the system, including theft, line losses, and unpaid bills, drive up costs. Widespread electricity theft, facilitated by public-sector electricity distribution officials, remains a pervasive problem. Meter tampering and unauthorized 'kundas' are common practices. Corruption and mismanagement within distribution companies contribute to these issues.

Technical line losses are exacerbated by inadequate infrastructure investment and corruption. Non-payment of bills, including those owed by government agencies, further compounds losses and adds to the circular debt problem.

The third factor driving high electricity costs is expensive production. The majority of Pakistan's electricity comes from Independent Power Producers (IPPs) with guaranteed high returns, leading to capacity payments and cost burdens for consumers.

Global oil and gas price increases, coupled with currency devaluation, worsen the situation. The 2021 renegotiation of rates for IPPs helped mitigate this issue.

Lastly, new plant construction to meet growing electricity demand often incurs higher generation costs, straying from the 'least available cost' principle. While national policy may justify this, the government should bear the cost difference, not consumers.

Consumers are burdened with line losses, non-payment, theft, idle capacity, and indirect taxes. This must change.

Immediate measures should include finding alternative revenue sources or cutting spending to subsidize low-consumption slabs.

Long-term reforms should focus on phasing out indirect taxation, improving revenue collection, addressing DISCO governance issues, privatizing DISCOs with strong regulatory oversight, implementing seasonal reverse pricing policies, and subsidizing only the most deserving.

Fundamental energy sector reform requires effective governance, integrity, transparency, and evidence-based decision-making. These attributes are critical to addressing Pakistan's challenges.