Pakistan is being urged to cut its energy subsidies in order to resolve supply problems that have led to chronic electricity shortages. But the debate on reducing energy spending touches upon a more fundamental failing of the Pakistani state: a near total inability to get the population to pay either tax or energy bills.
Theoretically, maintaining artificially low prices for electricity should see the proportion of paid bills rise. But PEPCO, the national power company, has seen collected revenue fall over the past year.
Energy subsidies in Pakistan are contributing to “severe supply problems” according to a report from the country’s Petroleum Institute.
Power consumption has grown by 80% over the last 15 years, but a failure to keep up with demand has led to crippling electricity shortfalls.
Pakistan is to become a key buyer of Iranian natural gas at a time when relations with Washington are at their most strained in recent years.
Work on extending the Iran-Pakistan gas pipeline will begin in the next six months and is set to be complete by 2014, according to Asim Hussain, the Pakistani natural resources minister. Some 1,100 km of the 2,700 km pipeline has already been completed on the Iranian side of the border, stretching from the South Pars field to the frontier with Pakistan.