 Over the past few weeks, Pakistan has seen protests against soaring electricity prices and inflation. Power tariffs have surged by 76% recently. The immediate reason for the hike is a deal with the IMF. Pakistan and the IMF signed a deal for a $3 billion dollar loan in July 2023. One of the conditions was a cut in subsidies. However, this crisis is not a new phenomenon. It is the result of policies spanning decades. Successive governments encourage the private sector and signed deals which benefited them. Taimur Rahman, General Secretary of Pakistan's leftist Mazdoor Kisan Party, explains the origins and current nature of the crisis. So in Pakistan currently electricity prices have gone up not only because per unit electricity price has gone up but also because the government has imposed new taxes and the reason it's done so is because of the agreement and the conditions that the International Monetary Fund has placed on Pakistan for the loan that they have received which is about $3 billion dollars. Now in this agreement the International Monetary Fund has stated that Pakistan's government must charge the full price of the electricity to the consumer. Currently the Pakistan government was in fact subsidizing electricity. Now the reason why the Pakistani government has been subsidizing electricity is very, very interesting. In the 1990s, the Pakistani government decided that it would privatize the power sector and it did so not necessarily by selling its main power sector distribution and generation company which is called VAPTA but rather by breaking it up into several different units and by privatizing the Karachi Electric Grid and also by inviting other people to come and invest in independent as independent power producers. These companies called IPPs at the time which were mainly foreign based at the time but now many of them are Pakistani as well were given a sovereign guarantee by the government of Pakistan in dollar terms that they would be able to earn a profit. Now this has become absolutely untenable for Pakistan because as the price of the dollar has been going up the amount of money that the Pakistani government has to pay the independent power producers has also been going up and the government of Pakistan is now trying to push that cost onto the consumer which is of course causing the price of electricity to escalate but in fact the IPPs are demanding from the Pakistani government given the new dollar rate they were initially getting a subsidy of about 350 billion rupees now that subsidy has gone up to 1.3 trillion rupees and in the future it will go all the way up to 2 trillion rupees. In other words the subsidy given to these capitalist concerns that are called independent power producers has gone so high because of the rise in the price of the dollar and the rise in the price of fuel it's gone so incredibly high that it will essentially bankrupt the Pakistani government so the government has two choices either it can impose those high electricity prices on the consumer which is the option it's going for currently which will of course mean that millions of people will be pushed into a dark age literally into a dark age because they won't be able to afford electricity at these prices and or it can do go the other way oh sorry also I would like to add that if if government increases the price of electricity that means that the entire economy of Pakistan will slow down recently the Pakistan Institute of Development Economics has come out with the statistic that about 78 to 82 percent of industry is going to be incredibly negatively impacted by the rise in oil in electricity prices on the other hand what the government can do is that it can renegotiate its contracts with the independent power producers and say sorry we cannot give such high capacity charges capacity charges means that the government of Pakistan has to pay them a certain amount of money even if the government does not buy any electricity from independent power producers I mean the contract is absolutely mind boggling so what that means essentially is that even if the government is unable to buy electricity send it to the producer sorry to the consumer they still have to pay for it from the producer of that electricity and those prices have to be paid in dollar terms and they are astronomically high so this has put public finance in Pakistan into complete disarray and it is causing the Pakistan economy to completely tank and collapse because everything requires electricity if you have a business it requires electricity school colleges universities everything homes everything requires electricity so the conditions that the IMF has placed have in fact caused complete stagnation and the economic destruction of Pakistan which I was we had been arguing the Pakistani left had been arguing since day one these conditions were really unrealistic with the given how the IMF wants us to address the international trade balance which is basically by raising the price of the dollar which it will go up automatically given their conditions and free trade agreements and the rest of it given that the price of dollar will go up the public expenditures of the government will also go up because of the peculiar nature of the IPP contracts and that is threatening now to unravel the entire economy of Pakistan