Theme/Relevant Ministry:

ENERGY/POWER:
M/o Power; NEPRA

Project Brief:

This research study examines the impact of electricity sector reforms on the household welfare of the country. The ongoing reform process gradually eases the fiscal burden by eliminating subsidies. However, an increase in electricity prices reduces poor households’ affordability and is thus believed to increase energy poverty in Pakistan.

This study found that increasing electricity prices burdened the limited household resources and thus altered their budgetary allocation by employing secondary data. Further, it is found that without undertaking appropriate measures of compensation, a substantial proportion of poor households would be dragged below the poverty line. The study suggests that successful reforms should be accompanied by compensation packages for the poor and increased service quality and reliability for households paying higher prices.

The study also conducted a household survey of Karachi city as a case study to obtain in-depth information on the energy situation. Findings from the survey data show that although tariff rates are still subsidized for lower consumption households, additional charges like government charges, TVL fees, fuel adjustment charges etc., constitute a significant proportion of total electricity bills. The study also recognizes households’ cognitive and behavioural aspects in energy use by incorporating these modules in the survey questionnaire. Hence, numerous viable policy options are recommended in the study to successfully implement reforms without compromising the social aspects.

Public Policy Relevance:

This research explores the impact of recent upsurge of electricity tariff due to the gradual elimination of subsidies on household welfare. The study provides a comprehensive measure of energy poverty by including a wider set of variables representing both access and affordability dimensions of energy provisioning at household level. This study forms a rigorous analytical basis for energy policy making in Pakistan. It contributes to the existing literature not only by conducting the impact assessment of tariff on household welfare but also contributes by matching a policy variable with micro dataset.

Status:
COMPLETED 100%

Final Research Report, Policy Brief and Journal article can be downloaded from the link: https://pide.org.pk/rasta/publications-cgp-1-0/