World Bank predicts further tariff rise in Pakistan

• 14 years ago (2010-07-09)
• David Flin

North America 1021

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The World Bank has forecast further rises in the power tariff in Pakistan to bridge the gap between the cost of producing electricity and the revenue earned from consumers. John Wall, the World Bank’s Country Director for Pakistan, said the difference between cost and revenue currently runs into billions of rupees, and that the Pakistan government can no longer afford to continue to subsidise power use to this extent. He said: “The government does not have the capacity to subsidise and the banking system cannot lend ore to the power sector. The only way out remains to raise the tariff or shut down expensive power plants running on fuel oil.”

Wall said that the power sector reforms proposed by the World Bank had not been fully carried out. “The Pakistan Electric Power Company (PEPCO) has become a monopoly managing the power sector. PEPCO takes away revenues from the distribution companies, which must be in charge of their own finances. The managing directors at the distribution companies are still appointed by PEPCO. Let the board of directors of these companies be independent and decide who to appoint as MD.

“Once the system is functioning smoothly, then PEPCO goes out of business. That was always the intention and that is what is needed now.”