No immediate relief in sight for high electricity costs, experts warn

Experts have little hope for a reduction in Pakistan’s high electricity prices. The government has turned electricity and petroleum products into revenue sources, and Independent Power Producers (IPPs) face no performance checks or contract revisions, they said, adding that it gives the generators unchecked freedom.

Experts discussed the issues with DAWN at a seminar titled Pakistan Energy Crisis and IPPs: How Overbilling Impacts Quality of Life and Pathways to Solution, held at the Applied Economics Research Centre (AERC), University of Karachi on Thursday.

Experts highlighted that over-billing and high electricity costs have become a crisis, adversely impacting poor and middle-income households. This crisis affects their spending on health, education, food, and transport.

AERC Assistant Professor Dr. Aamir Siddiqui stated that electricity charges are unlikely to decrease soon because the government uses petrol and electricity as revenue sources. With around 100 IPPs and numerous suppliers in the country, electricity prices should at least be stable, but they continue to rise.

He also noted that Pakistan generates more power than needed, yet load shedding persists. Despite this, the government is not addressing the quality and services of IPPs or revising their contracts, even though payments are made in dollars or equivalent exchange rates.

Dr. Muhammad Saber, Principal Economist at the Social Policy and Development Center in Karachi, stated that electricity rates will not decrease until the government prioritises public welfare over its own interests. He pointed out that many contracts with IPPs were signed without considering public benefit, and even IPPs not supplying electricity receive timely and full payments.

AERC Assistant Professor Dr. Fauzia Sohail mentioned that the residential sector is the largest consumer of electricity, followed by the industrial sector. Low and middle-income households are particularly affected by over-billing. Rising electricity charges force people to cut spending on essentials like health, education, food, transport, and housing. This not only adversely impacts these amenities but also drives some low-income individuals below the poverty line, especially in Karachi.