The government of Punjab, Pakistan’s most populous province, has announced free electricity to about 900,000 consumers who use up to 100 units a month.

Punjab Chief Minister Hamza Shahbaz recently announced that the Punjab government would provide free electricity to all domestic consumers who consume 100 units or less per month for the next one year.

He said that the number of consumers who will benefit from this relief program is around 44 to 90 lakh families annually. He said that the government has set aside Rs 100 billion for this program.

According to Hamza Shahbaz, “this is a targeted subsidy by the government which will benefit the poorest section of the province.”

Following the announcement by the Punjab Chief Minister, he came under fire from the opposition Pakistan Tehreek-e-Insaf (PTI) for trying to use it as a “political ploy” and to influence the by-elections in Punjab this month. ‘Declared.

Many users on social media are also asking the question, will there really be families today who use only 100 units of electricity in hot weather?

So the question is whether the Punjab government’s estimate of the number of users is correct? And if so, to what extent can those who consume 100 units of electricity per month be protected from the effects of rising inflation by providing free electricity?

At the same time, in the run-up to the by-elections, on which occasion it has been announced, is it a political ploy or will the common man really benefit from it?

Economists and energy experts have differing views on all these questions, but most believe that it is not difficult for the Punjab government to provide such targeted subsidies despite difficult economic conditions.

Are there people who use only 100 units?

Dr Sajid Amin, an economist with the Sustainable Development Policy Institute (SDPI), thinks there are such people.

Speaking to the BBC, he said the government was targeting poor households through the subsidy, “probably those who live in a one-room house and use a bulb or a fan.” There are. ‘

According to Dr. Sajid Amin, according to a 2017 survey by the Pakistan Bureau of Statistics, about 25% of households in Pakistan have one-room or one-room houses.

Tahir Basharat Cheema, a former managing director of Pakistan Electric Power Company (PEPCO), told the BBC: Do. ‘

Engineer Tahir Basharat Cheema estimates that the average number of consumers in Punjab will be around 7.6 million, which increases in winter. what will happen.’

In his view, the provincial government’s estimate of Rs 100 billion for this subsidy seems reasonable, provided the government succeeds in preventing possible misuse of the subsidy by consumers.

“It looks like a political move.”

On the other hand, Pakistan Tehreek-e-Insaf (PTI) leader Fawad Chaudhry in a letter to the Supreme Court of Pakistan has requested that the Punjab government’s plan be stopped from being implemented.

“This plan is in violation of court orders and has been announced for political gain,” he said in the petition.

Fawad Chaudhry is of the view that the Punjab Chief Minister can only look after the regulatory arrangements at present.

Speaking to the BBC, Engineer Abdul Wahab Gujjar, president of the WAPDA Engineers Association, said he too understood that “this is just a political move”.

In his opinion, there are so many electric devices today that it is not possible for anyone to use 100 or less units in a month.

“Even in a one-room house, if there are two fans and two light bulbs, it is very difficult for the bill to be less than one hundred units.”

Engineer Abdul Wahab Gujjar said that according to his estimate, the number of consumers who consume less than 100 units of electricity per month will be very low.

“It simply came to our notice then.

How much can free electricity benefit the poor?

In the view of Dr. Sajid Amin, affiliated to SDPI, this free electricity scheme by the Punjab government is a direct subsidy which will benefit only the extremely poor.

Speaking to the BBC, he said it was the responsibility of any government to provide targeted subsidies to the poorest people to protect them from the effects of rising inflation.

“I think this scheme is a good example of targeted subsidies.”

They illustrate this with statistics and examples of past subsidies. According to Dr. Sajid Amin, the subsidy given to oil products by the previous government was not a targeted subsidy, so it benefited the rich more.

“The Rs 250 billion subsidy given to freeze the prices of petroleum products has benefited the affluent class who have big cars and did not need the subsidy much.”

Dr. Sajid Amin said that on the contrary, the advantage of targeted subsidy is that it benefits the class which needs it. He thinks that only those who are doing so can benefit from free electricity at a cost of 100 units.

 

How much will those who consume only 100 units of electricity save per month?

Dr Sajid Amin, an economist affiliated with SDPI, said that it could be estimated that if consumers who spend up to 100 units get electricity at Rs 12-13 per unit, their monthly electricity bill would be Rs. Comes from 1200 to 1300 rupees.

According to him, these are the families belonging to this class to whom the government provides financial assistance through schemes like Benazir Income Support Program. According to him, the number of such families is about 40% of BISP.

“If the government pays the monthly electricity bill of around Rs 1,300 for these families, it will be a huge relief for these very low-income families,” he said. The money they save on electricity bills will be used to buy food, medicine or other necessities.

According to Dr. Sajid Amin, in this way, the government is giving these families an additional Rs. 1300 along with Rs. 2,000 of BISP, which is a huge financial benefit for them.

Can the government afford subsidies in difficult financial situations?

Former PEPCO Managing Director Engineer Tahir Bashir Cheema believes that the Punjab government’s allocation of Rs 100 billion for this subsidy should be enough for 9.6 million families.

However, he warned that this would require the government to ensure that consumers do not misuse subsidies.

“For this, the government has to ensure that electricity is not stolen and consumers do not use other illegal means to achieve the target of 100 units.”

According to Engineer Tahir Bashir Cheema, the government’s ‘targeted subsidy’ was a good move and the local government in New Delhi, India, still provides free electricity to the poorest through a similar program. Running successfully.

He said that the Punjab government has apparently set up a check and balance system, which also looks at who are the consumers who spend 100 units or less during the last six months.

 

“It would be nice if this program could be part of the budget.”

Economist Dr Sajid Amin said that despite the difficult financial situation for the Punjab government, spending Rs 100 billion on the program should not be a big issue as “it is not a huge amount”.

However, he said it would have been better if the Punjab government had made such a scheme a regular part of the budget and run it in a systematic manner.

“If this subsidy had been given regularly through a system, the government would not have faced the criticism that it is doing it for political gain and it would have been easier to transfer this financial benefit to the lower classes,” he said. ‘

“It would be nice if this program could be part of the budget.”

Economist Dr Sajid Amin said that despite the difficult financial situation for the Punjab government, spending Rs 100 billion on the program should not be a big issue as “it is not a huge amount”.

However, he said it would have been better if the Punjab government had made such a scheme a regular part of the budget and run it in a systematic manner.

“If this subsidy had been given regularly through a system, the government would not have faced the criticism that it is doing it for political gain and it would have been easier to transfer this financial benefit to the lower classes,” he said. ‘

 

 

Will free solar panels be a permanent solution to the problem?

With this free electricity program, Punjab Chief Minister Hamza Shahbaz had also announced that in the next phase, he would also provide solar panels to such poor families so that they could get rid of their dependence on electricity permanently.

However, experts believe that the program of providing solar panels will be complicated and it will not be easy to get rid of complete dependence on electricity.

According to Tahir Bashir Cheema, former managing director of PEPCO, solar panels are not a viable solution.

“We also lack the understanding of consumers to use it and there are a lot of additional costs associated with it which makes people give up using it.”

Economist Dr. Sajid Amin thinks it would be very difficult for the government alone to provide such a large number of free solar panels and ensure that they continue to be used properly.

He believes that such a scheme can only be successful if it involves the participation of the government as well as the private sector and consumers themselves.