Experts Skeptical About Relief from High Electricity Bills
Experts are pessimistic about a reduction in high electricity prices, citing the government’s reliance on the power sector as a revenue source and the unchecked power enjoyed by independent power producers (IPPs) over their operations and agreements.
During a media briefing titled “Pakistan Energy Crisis and IPPs: How Overbilling Impacts Quality of Life and Pathways to Solution” at the Applied Economics Research Centre (AERC), University of Karachi, experts highlighted the ongoing crisis of overbilling and its detrimental impact on poor and middle-income households. The rising costs are affecting essential expenditures such as health, education, and transportation.
Dr. Aamir Siddiqui, assistant professor at AERC, explained that electricity prices are unlikely to decrease soon because the government uses both electricity and petroleum products as major revenue streams. Despite having around 100 IPPs, which should stabilize prices, electricity costs continue to rise. He noted that Pakistan is producing more power than needed, yet load shedding persists, and the government has failed to negotiate or revise agreements with the IPPs, even though payments are made in dollars or equivalent amounts.
Dr. Muhammad Sabir, principal economist at the Social Policy and Development Centre Karachi, emphasized that electricity tariffs will remain high until the government prioritizes public welfare over its own interests. Many agreements with IPPs were made without considering public benefits, and some IPPs that fail to deliver power are still paid fully and promptly.
Dr. Fauzia Sohail, assistant professor at AERC, pointed out that residential consumers, particularly low and middle-income households, are disproportionately affected by high electricity costs. Rising bills force people to cut back on essential needs, potentially pushing some below the poverty line. She urged the government to provide compensatory support in health and education to mitigate these effects.
Rao Asad, an M.Phil scholar at AERC, criticized K-Electric for overbilling and load shedding to mask its inability to meet city demand. The experts also noted that many IPPs are owned by individuals with political ties, which may explain the lack of stringent action against poorly performing IPPs.
Dr. Asghar Ali, who moderated the event, mentioned that IPP audits are rarely conducted in Pakistan, exacerbating the problem. Suggested solutions include negotiating with IPPs, considering their nationalization, and implementing financial and social support programs for affected citizens, as well as restructuring K-Electric into separate generation and distribution entities.
Director AERC Prof. Dr. Nooreen Mujahid and CEO Ataleeq Foundation Shahzad Qamar also participated in the discussion.
