In view of the power sector’s dire financial condition,
and the inability of government to absorb the losses
caused in large part by its intervention in the setting of
tariffs, it is imperative to rationalize the pricing of
electricity. The highest policy priority should be to
rebalance the structure of tariffs and realign prices with
underlying costs, in part to restore revenue adequacy
and generate internal funds for capital investment
and in part to eliminate poorly targeted and
inequitable subsidies that have created an unsustainable
fiscal burden.