Islamabad, July 14, 2021 (PPI-OT):The Pakistan Economy Watch (PEW) on Wednesday said ignoring reforms and reducing power tariff through subsidies will not resolve but exacerbate the problem. The electricity is getting costlier for years while the circular debt has crossed the mark of Rs2.5 trillion to become a threat therefore electricity should not be made economical through subsidies but real reforms, said Chairman Pakistan Economy Watch Brig. (retd) Aslam Khan. In a statement issued here today, he said that subsidies are not a preferable way to the problem as its burden is also endured by masses in the shape of taxes and inflation etc.

He noted that the cost of power generation has increased by 76 percent over the last five years; power tariff has increased by 39 percent and this sector has resulted in a loss of 82 billion dollars to the GDP. There are 30 million power connections in the country and 24 million out of them are getting electricity at subsidized rates. This means eight of every 10 connections are receiving electricity that doesn’t cover the cost of power production which is not sustainable, he said.

The reasons behind the power sector mess are ignoring reforms for decades and agreements resulting in exorbitant payments to private power producers even if they don’t generate electricity. He noted that reforms are the only way out and the government will have to reduce theft wastage and losses, force defaulter government departments to pay bills, tame private power producers and opt for renewables, he said.

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