🔲 Public Investigative Series | Episode 20
Title: How Pakistan’s Electricity System Can Be Fixed
Topic: Free Electricity
🔺 When institutions refrain from providing facts, it becomes the responsibility of the public to pursue the truth.
Research and Writing: Syed Shayan
🔳 If a retired Supreme Court judge can be granted 2,000 free electricity units, and a High Court judge 800 units per month, even extending to the widow after death, then by the same logic, such privileges should also be extended to a retired teacher, a scientist, a doctor, an engineer, an IT professional, or others who have devoted their lives to serving the nation. However, in the broader national interest, this is not a just or sustainable path. Free or subsidised electricity cannot be treated as a permanent entitlement for any individual.
Government backed electricity benefits in Pakistan exist in multiple forms, yet they all share one common feature: their cost is ultimately borne by the public. Sometimes this burden is absorbed through the national treasury, sometimes embedded within consumer bills through cross subsidy, and at other times it appears in the form of circular debt. In simple terms, these costs eventually find their way back into the electricity bills of ordinary citizens.
To understand the structure of free electricity, it can be divided into seven fundamental categories:
1. Free Electricity
2. Subsidised Tariff
3. Monetised Utility Allowance
4. State Paid Bills
5. Targeted Cash Transfer for Energy
6. Opaque Institutional Privileges
7. Regional or Territorial Subsidy
Let us examine each of these individually.
This refers to electricity provided completely free of cost, with a zero tariff, to specific groups.
The latest development indicates that, for the first time, a decision has been taken to withdraw this benefit, which has been welcomed by the Federal Minister for Power, Awais Leghari, following the Lahore High Court ruling.
This represents the most direct form of free electricity, funded entirely through public resources.
In this case, electricity is not free but provided below its actual cost.
While such subsidies support targeted sectors, their financial burden is ultimately transferred either to the government or to other consumers.
Here, electricity is not provided directly at a discount, but its cost is compensated through salary or allowances.
The Public Accounts Committee in 2022 recommended replacing free electricity for WAPDA employees with a utility allowance. This effectively changes the form of the benefit without eliminating the cost. Similarly, many Grade 17 and above officers receive utility allowances, house rent benefits, or reimbursements, indirectly covering their electricity expenses.
This system appears transparent but does not reduce the underlying financial burden on public resources.
In this model, electricity is billed at full cost, but payment is made by the state rather than the user.
Senior officials residing in government accommodations do not pay their own utility bills. Instead, these are covered by the national treasury. Beneficiaries include federal and provincial ministers, senior bureaucrats, military officers in cantonments, and members of the higher judiciary.
Although presented as an administrative arrangement, the financial burden ultimately falls on taxpayers.
This is a relatively new approach in Pakistan, where instead of reducing tariffs, financial assistance is provided directly to eligible households.
The government has committed to linking energy subsidies with the Benazir Income Support Programme so that only low income households benefit. Additionally, the Punjab government has introduced a free solar panel scheme for low income families, prioritising widows, female headed households, and rural communities.
These are benefits that are neither fully documented in law nor transparently disclosed.
In this case, subsidies are provided to entire geographic regions rather than specific individuals.
This category is the broadest, as entire populations benefit regardless of income or status, with the financial burden transferred to the national treasury and other consumers.
🔲 Dear readers, the core conclusion of this research is simple: electricity in Pakistan is not expensive because generation costs are inherently high, but because the cost is not shared equally. Some pay fully, while others pay partially or not at all. In other words, the distribution of cost among consumers is neither efficient nor fair.
The path to reform lies in adopting a transparent system where electricity tariffs are uniform for all consumers, with no hidden components. Every bill should reflect the true cost, regardless of income, status, or location. This would eliminate market distortions and remove confusion about the real price of electricity.
If a uniform base tariff, for example PKR 25 per unit, is implemented for all residential consumers, full cost recovery becomes possible. Financial transparency improves within distribution companies, cross subsidy burdens are eliminated, and circular debt becomes easier to control.
If support is required, it should be provided only to eligible households through a verified national social registry, based on income, household size, assets, travel history, and financial condition.
Such support should be offered as a percentage discount on the total bill, for example 30 percent or 40 percent, rather than reducing the per unit price. This approach ensures that consumers remain aware of the true cost, encouraging conservation, while also maintaining fiscal transparency for the government.
This proposal is aligned with the principles of a National Social Registry and targeted subsidy, widely recognised as the most effective and equitable approach in modern economic systems.
(Continued in the next episode)
