The caretaker Prime Minister Anwar ul Haq Kakar has so far refrained from ending approximately Rs 20 billion worth of free units of electricity which are currently admissible to the employees of WAPDA, and ex-WAPDA companies (DISCOs, GENCOs, NTDC, PITC).
So, how many people in Pakistan benefit from free electricity? The answer is not straightforward. Due to a lack of transparency and data, it is difficult to estimate the exact cost of free electricity being provided to government officials, power sector employees, the judiciary or the military.
The Power Division estimates that 15,971 employees from BPS 17-21 consume 7 million units of free electricity per month, and 173,200 employees from BPS 1-16 consume 330 million units of free electricity per month. Sadly they do not provide a more granular look into the matter.
According to the National Electric Power Regulatory Authority's (NEPRA) State of Industry Report for 2022, serving and retired employees of power distribution companies (DISCOs), generation companies, the National Transmission and Despatch Company (NTDC), and the Water and Power Development Authority (WAPDA) are entitled to free electricity units.
The amount of free electricity provided amounted to Rs 6.4 billion in fiscal year 2022 (FY). This figure, however, excludes the electricity provided to WAPDA employees. How much do they consume? No one knows. NEPRA is yet to conduct that exercise.
The report also reveals that electricity consumers are paying for the pension benefits of retired employees of these power companies. The report elucidates on the total pension benefits, including free electricity, of six DISCOs located in Gujranwala, Quetta, Hyderabad, Sukkur, Multan, and Peshawar.
Across these six DISCOs, the benefits in terms of just electricity units given to retired employees stand at an average of Rs 664 million per year from 2017 to 2025.
Why aren't they ending free units?
According to sources, the caretaker premier, during the course of a federal cabinet meeting, stopped the authorities concerned from terminating the free electricity facility of the government officials, ostensibly owing to fear of protest by the government employees. They said that the PM believes that such a step will likely open a new window of agitation and litigation. They said the PM has directed the Minister for Power, Minister for Commerce and Minister of Finance to deliberate on the 'Monetization of Free Electricity Units Admissible to Employees of WAPDA (Water and Power Development Authority), and ex-WAPDA companies (Power Distribution Companies (DISCOs), Power Generation Companies ( GENCOs), National Transmission and Despatch Company (NTDC), Power Information Technology Company (PITC)' and give recommendations in this regard. Also, the caretaker PM thinks that factors like power theft, purchase of capacity payments to IPPs, inadequate inter-Ministerial coordination, circular debt, etc. were all responsible for the increase in electricity bills, said sources well-aware of the development regarding the issue of Monetization of Free Electricity Units Admissible to Employees of WAPDA and ex-WAPDA companies (DISCOs, GENCOs, NTDC, PITC).
The sources added that the federal cabinet had considered the summary titled ' Monetization of Free Electricity Units Admissible to Employees of WAPDA, and ex-WAPDA companies (DISCOs, GENCOs, NTDC, PITC), dated 26th August, 2023, submitted by the power division , and directed the Minister for Power, Minister for Commerce and Minister of Finance to deliberate on the matter and suggest the way forward.
As per sources, the federal cabinet members on 26th August, 2023 felt that provision of this facility of free electricity units to anyone was unfair, especially due to financial crunch the country faces. It was noted with concern that even retired employees were getting this prerequisite. Two possibilities were discussed. First, that withdrawing a prerequisite which was offered at the start of employment would lead to extended litigation, therefore, replacing it with monetization was the right way to handle it. Second any compensation, being unfair and iniquitous.
During the course of this federal cabinet meeting, the Minister for Law stated that the subject privilege of free electricity was provided as part of the contract to the employees of the power sector. Therefore, subsequent changes to terms and conditions of service, withdrawal without any alternate compensation, is most likely to result in litigation.
It is also learnt from sources that the power division also shared comments of the cabinet division, NEPRA, Finance Division, and Ministry of Water Resources/WAPDA before the cabinet meeting held on 26th August, 2023,.
NEPRA was of the view that utility allowance may be given to the officials, instead of free units/monetization.
Ministry of Water Resources/WAPDA stated that proposed arrangements would result in no savings.
Finance Division recommended that free electricity may not be granted and discontinued.
Power division informed that out of total 189,000 employees availing free units of electricity, 14000 are officers who will be impacted in first phase of monetization.
It may be mentioned that the above monetization does not include sales tax @ 18% and other duties.
The cabinet members further inquired if any such prerequisite was being provided to any other departments or authorities. The Secretary Power replied that with the exception of the power sector employees, who were not even billed due to this facility, all other government employees and officers were being billed for payment of electricity.
Members stated that even in those cases, the individuals are not paying instead the organization are paying for it, mostly from government's budgetary allocations. Sone members desired that this facility should be withdrawn from non-officer cadres also.
The cabinet noted that since Pakistan was under an IMF Programme, which did not support any subsidy, prior consultation with the finance division with reference to IMF conditionalities was necessary before any compensation package/relief was considered.