Energy Sector & Government Revenues
Government aims for PKR 920 billion in lieu of petroleum levy and PKR 5.2 billion as fuel price adjustment charges.
As part of the IMF program, Pakistan has implemented a couple of fuel-related taxes. Whether it be the fuel price adjustment in our electricity bills or petroleum levy. The constant hike in fuel-related prices finds its basis in the inelasticity of petrol demand in Pakistan. The energy dependency ratio in Pakistan is quite high, which is to say that the country imports fuel to fulfill more than 30% of its energy demand. This provides the cash-strapped government with an opportunity to extract as much revenue as it wants.
Pakistan aims to achieve 60% of power generation from clean energy sources within the country by 2030. But that would mean straying from the comfortable method of raising revenues through levies and adjustment charges. Even currently, the global demand for fuel has led to a downturn in prices, yet Pakistan plans to raise the levy as well as fuel adjustment charges.
The superficial reasoning here is doing what is required to stay in the IMF program. However, the Pakistan government has conflicting interests in the short run. On one hand, the country is in dire need of a drift in its energy policy. But on the other hand, the current regime allows for maximum revenue generation from the people. The volatility in the country's leadership further adds to the dilemma.
Political stability and longer term policies are crucial for the country. Since temporary benefits have led us nowhere.
GRAPHIC
Unlocking the potential of the private sector in Pakistan could yield substantial benefits, including a US$88 billion export potential.
Meanwhile, addressing the financial challenges posed by the top 14 loss-making public enterprises could result in savings of up to Rs. 458 billion per year.
In 2023, Pakistan is set to become the 47th largest e-commerce market, with a 6% growth rate. Despite economic challenges, e-commerce transactions grew by 34% last year.
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