Prime Minister Shehbaz Sharif on Tuesday approved a three-month subsidy package worth Rs50 billion ($179.5 million) for electricity consumers using up to 200 units per month. This decision came in response to backlash from the salaried class over the tax-laden federal budget, which has sparked debate over the rising cost of living in Pakistan.
The announcement followed the government’s approval of a 51 percent increase in the cost of electricity last week for low-income consumers, aiming to meet one of the conditions set by the International Monetary Fund (IMF). Faced with a prolonged economic crisis, the Sharif administration is seeking another staff-level agreement with the IMF for a bailout exceeding $6 billion.
“The government will spend Rs50 billion, which has been taken from development funds,” the prime minister said during a ceremony on energy reforms in Islamabad. “We are providing this facility for three months—July, August, and September—to households that consume up to 200 units.”
He noted that the decision would benefit 25 million households, constituting 94 percent of domestic electricity users. These consumers, including those with K-Electric, would pay only four to seven rupees per unit.
“These three summer months are hard to cope with, but electricity consumption declines when the weather gets pleasant in October,” he added.
Pakistan’s expensive electricity is due to various factors, including a high reliance on imported fossil fuels, an inefficient energy mix, substantial transmission and distribution losses, and chronic issues like circular debt and regulatory inefficiencies.
Outdated infrastructure and inefficient power plants further exacerbate costs, while the underutilization of domestic resources, such as hydropower and coal, adds to the problem. Additionally, fluctuations in foreign exchange rates and complex tariff structures contribute to higher electricity prices.
