Wed. Oct 4th, 2023
    Pakistan Faces Protests as Rising Electricity Prices Spark Public Anger

    The people of Pakistan are feeling the strain of rising electricity prices and brisk inflation, leading to nationwide protests and trader strikes throughout August. In an effort to reduce the country’s unsustainable public debt in the power and gas sectors, Pakistan increased its power tariffs in July as part of a loan program approved by the International Monetary Fund (IMF). However, this move has led to a surge in electricity bills for tens of thousands of Pakistanis, exacerbating their financial struggles.

    The impact of these rising costs is particularly profound for low-income groups, who are finding it increasingly difficult to make ends meet. Financial expert Ali Nawaz explains that higher electricity bills have significantly reduced disposable income, affecting livelihoods and the ability to cover daily living expenses, healthcare expenditure, and food-related costs.

    One of the driving factors behind the high electricity prices is the cost of non-renewable fuel resources such as gas, furnace oil, diesel, and coal. Additionally, the devaluation of the Pakistani rupee against the US dollar has made imported fuel even more expensive.

    Another contributing factor is the debt accumulated by power generation companies and the gas sector. The government owes around 2.6 trillion Pakistani rupees ($9.04 billion) to power generation companies and 1.6 trillion Pakistani rupees ($5.56 billion) to the gas sector. The power sector also faces challenges related to theft.

    The costs of electricity are further inflated by capacity payments made to Independent Power Producers (IPPs). These private entities generate electricity for sale to end-users, but critics argue that the contracts favor the companies and result in high costs for consumers. IPPs have been accused of making excessive profits and dividends, leading to calls for auditing their practices.

    The Pakistani government is aware of these issues and is actively working to address them. Caretaker Prime Minister Anwaar-ul-Haq Kakar has acknowledged the problems with IPP agreements and has stated that the government is in discussions to find a resolution. Efforts are also being made to explore alternative energy sources and reduce electricity prices for the benefit of the people.

    – Financial expert Ali Nawaz
    – Official figures on government debt to power generation companies and the gas sector