Power tariff hike: Consumers to bear the brunt

Inflation rate was already high in the country and then came the power tariff hike. It does not make sense at all.

Thanks to the move, the electricity bills will rise on the one hand and the commodity prices will soar on the other. The cost of irrigation will rise, so will the price of agricultural produce. Factories and shops will face increased cost of electricity.

A large part of the increased cost is generally passed on the consumers.

The government provides a huge subsidy to the power sector. The price hike would shrink the subsidy to some extent, but there would be no major changes. Presumably, this was done as part of the reforms that the international monetary fund (IMF) suggested as a condition for availing its loan. I think it could have been done in a different way without increasing the price.

Moreover, the power tariff hike would not guarantee an uninterrupted power supply. The overall power generation soared in the country, but the efficiency of the power sector did not improve. The burden was placed on the consumers, rather than addressing the prevailing issues, including quick rental, inefficient power plants, diesel-fired plants, and low-capacity transmission lines.

Another issue is the capacity charge, which eats up the major portion of the subsidy. The authorities should consider the issues that are pushing up the electricity price. They should track down a way on how to get rid of fossil fuels and produce low-cost renewable energy. The government should have a mid and long term plan in this regard.

The government announced suspension of diesel-based power generation and the use of solar energy for irrigation. But there is no visible initiative to implement the announcement. The government is doing the easiest thing - shifting the pressure towards the consumers.

***The author is research director of the Centre for Policy Dialogue (CPD).***