Barriers to the adoption of social welfare measures in the electricity tariff structure of developing countries: A case of Pakistan

Abstract

Energy tariff plays an important role in ensuring affordable energy availability in a country. Various developed countries have incorporated social welfare indicators in their electricity tariff structures to support their lower-income groups. The developing countries, riddled with multifaceted challenges in their energy value chains have not taken care of access to affordable energy for the poor (SDG7). Existing literature on developing countries and Pakistan has not sufficiently highlighted the drivers of social welfare mechanisms in the electricity tariff structure for poor households. This study aims at examining the factors contributing to the decline in social welfare for electricity household consumers in Pakistan. The study has utilized a mixed analytical approach, incorporating NVIVO analysis and Q methodology. The results highlighted a lack of regulatory performance, political influence, suboptimal governance, and financial constraints as barriers to enhancing the residential consumer's social welfare in Pakistan. Our findings may help to devise and revise the policies such as power sector subsidies for the determination of better electricity tariffs for the poorer segment of society in Pakistan. Other developing countries may also benefit by improving the relevant policy circumstances (main barriers from this study) of the electricity subsidies for poor households.