In recent developments, reports indicate that negotiations between the Establishment and Pakistan Tehreek-e-Insaf (PTI) have made significant headway—a move that many see as a step toward de-escalating long-standing political tensions. Moreover, the recent decision allowing PML-N leader Nawaz Sharif to travel abroad has further fueled speculation that behind-the-scenes consensus-building efforts are in motion
Opinion
Ansar M Bhatti
Prime Minister Shehbaz Sharif has announced a much-anticipated relief package for both domestic and industrial electricity consumers, aiming to provide financial respite amid rising inflation and economic pressures. The move has been welcomed by both business communities and the general public, as it is expected to lower operational costs for industries and ease the burden on household budgets.
While the initiative is being largely appreciated, some experts and economic analysts argue that there was considerable room for a more substantial reduction in electricity tariffs. They contend that the government could have utilized available financial buffers and reforms to provide even greater relief. However, given the challenges in the power sector—such as inefficiencies, circular debt, and distribution losses—policymakers have adopted a cautious approach to ensure sustainability.
While unveiling the package, Prime Minister Shehbaz Sharif emphasized the urgent need to address systemic issues in the power sector, particularly electricity theft, which contributes significantly to revenue losses and inefficiencies. He reiterated that eliminating power pilferage and enforcing stricter controls would not only reduce losses but also create the fiscal space necessary for further reductions in tariffs.
The prime minister further assured consumers that the government is committed to making energy more affordable and sustainable. He hinted at the possibility of additional tariff reductions in the near future, subject to improvements in power sector management and economic conditions. With this announcement, the government aims to strike a balance between providing relief to consumers and maintaining financial stability in the energy sector. As implementation unfolds, all eyes will be on the impact of this initiative on businesses, households, and Pakistan’s broader economic landscape.
Despite recent developments, several pressing questions remain unanswered. The relief came only after the government decided to do away with the dormant power plants. Additionally, the government announced the cessation of capacity payments, primarily targeting state-owned power plants. However, it remains unclear whether this policy will extend to private power producers, particularly those operated by Chinese companies. At first glance, it appears that the measure will impact only government-owned independent power producers (IPPs).
The issue of so-called “ghost power plants” that have not generated a single kilowatt of electricity yet received billions of rupees is a serious one. It raises fundamental concerns about accountability, governance, and the misuse of public funds. The critical questions remain: Will there be any action against these plants? Will an independent audit be conducted to determine the extent of financial losses and identify those responsible?
It is evident that the burden does not lie solely with the Independent Power Producers (IPPs). The government machinery that facilitated these transactions must also be scrutinized. This situation suggests a deeper network of systemic failures, possibly involving regulatory bodies, policymakers, and oversight agencies that allowed such arrangements to persist.
To move forward, there needs to be a transparent and independent audit to trace where the funds went and how much was extracted from the public exchequer. If wrongdoing is confirmed, legal consequences should follow—not just for the IPPs but also for those within the government who enabled these transactions. Without meaningful action, public confidence in the power sector and government oversight will continue to erode.
Beyond the power sector, several other areas require immediate government attention. The continuous depreciation of Pakistan’s currency against the US dollar is severely impacting imports of raw materials, affecting industries such as the newspaper sector. One does not need to be an Aristotle to recognize that the currency will only strengthen when exports increase. However, there appears to be no serious effort from the government to encourage businesses to boost exports. While high electricity tariffs have been a major obstacle, the recent rate cuts are unlikely to provide significant relief or drive export growth. A comprehensive strategy is needed to address the root causes and create a more export-friendly environment.
Pakistan’s most pressing challenge arguably stems from its meagre foreign exchange reserves. In realistic terms, these reserves hold little weight without the financial support extended by Saudi Arabia and the United Arab Emirates. Political and economic analysts believe that both Riyadh and Abu Dhabi deliberately maintain their deposits in Pakistan’s central bank to retain strategic leverage over Islamabad — a tool they can deploy whenever their regional interests demand it. This external financial dependence is expected to play a pivotal role in shaping Pakistan’s foreign policy decisions in the future, particularly when the sensitive issue of recognizing Israel inevitably surfaces.
Quite recently, a major UAE airline sought to commence operations in Pakistan. However, in a familiar pattern, bureaucratic red tape and administrative delays on our end hindered the timely granting of necessary permissions. It wasn’t until the UAE halted the operations of all its airlines to Pakistan for several hours—a move that underscored the depth of our economic reliance—that the required approvals were promptly granted. This incident is a stark reminder that true national independence is intrinsically tied to economic sovereignty. The sooner our decision-makers and power-wielders internalize this reality, the better it will be for the country’s long-term stability and global standing.
There is no doubt that internal political stability serves as a cornerstone for sustained economic progress. Without a predictable and coherent political environment, economic planning, investment, and public confidence remain under constant threat. In recent developments, reports indicate that negotiations between the Establishment and Pakistan Tehreek-e-Insaf (PTI) have made significant headway—a move that many see as a step toward de-escalating long-standing political tensions. Moreover, the recent decision allowing PML-N leader Nawaz Sharif to travel abroad has further fueled speculation that behind-the-scenes consensus-building efforts are in motion.
If these trends continue and lead to a broader political settlement or at least a temporary détente, the effects on the economy could be profound. Political calm encourages investor confidence, improves market sentiment, and enhances the government’s ability to focus on policy rather than firefighting crises. Ultimately, Pakistan’s economic well-being is inextricably linked to its political stability. The sooner the political stakeholders agree on a path forward, the better positioned the country will be to tackle pressing economic challenges, attract foreign investment, and improve the lives of its citizens.
