Spiraling electricity bills overtake rent costs for some people in Pakistan

By Faseeh Mangi

Electricity bills have outpaced home rental rates for some people in Pakistan, as tariff increases and other reforms to comply with IMF loan conditions spark nationwide protests.
 

The South Asian nation — where nearly half the population survives on less than $4 a day — has seen electricity prices surge 155 per cent since 2021, after the government started hiking industrial and retail rates to bolster its chances of securing loans from the International Monetary Fund. 

The energy sector has become an acute pain point as Pakistan grapples with chronic economic crisis. Inflation of around 12 per cent — the highest in Asia — has eroded purchasing power and pushed electricity consumption to the lowest in four years as people and companies abandon the predominantly gas-powered national grid in favor of installing solar panels. 

The average per-unit electricity price for residential users rose 18 per cent in July, when the country secured a new $7 billion loan from the IMF. Many residents have since seen electricity bills — typically a fraction of household expenses — surpass rents that range from $100 to $700 a month, said Samiullah Tariq, head of research at Pakistan Kuwait Investment Co. 

Protests by citizens, business groups and opposition political parties have spread across the country, prompting Prime Minister Shehbaz Sharif to announce a Rs 5,000 crore ($180 million) subsidy over the next three months to cushion the poorest electricity users from the blow of price hikes. 

Pakistan and the IMF have agreed to restore energy sector viability as part of the bailout programme, which includes cost cuts and privatisation of state-owned power distribution companies. Pakistan loses about 16 per cent of the electricity it generates to theft, and transmission and distribution losses, according to its power regulator.