Pakistanis struggle to keep the lights on amid record electricity bills, sky-high inflation

Muhammad Amir Khan, a driver with a private company, holds his electricity bill of Rs28,457 ($95.99) on September 18, 2023, in Karachi, Pakistan. (AN Photo)
Short Url
Updated 19 September 2023

Pakistanis struggle to keep the lights on amid record electricity bills, sky-high inflation

  • Pakistan saw nationwide protests and strikes all of August over rising electricity prices and brisk inflation
  • Pakistan hiked power tariffs in July under IMF deal to reduce unsustainable public debt in power and gas sectors

KARACHI: Muhammad Amir Khan, a driver with a private company, has been in despair since last month when he received an electricity bill of Rs28,457 ($95.99).

With a monthly salary of Rs27,000 ($91.7) — his only source of income to support a seven-member household — Khan had no option but to default on paying the bill.

Now he waits for the inevitable: the power supply company to turn the lights off.

Khan is not alone.

Pakistan saw nationwide protests and trader strikes all of August over rising electricity prices and brisk inflation, as citizens and businessmen came out to burn electricity bills in a show of defiance and despondency. A $3 billion loan program, approved by the International Monetary Fund (IMF) in July, averted a sovereign debt default in Pakistan but reforms linked to the bailout have fueled annual inflation running at 27.4 percent.

Pakistan increased its power tariffs in July under the IMF deal, part of moves to reduce unsustainable public debt in the power and gas sectors. Tens of thousands of Pakistanis thus received steep electricity bills during August for power units consumed in July. To make matters worse, Pakistan last Friday also announced a record rise in petrol and diesel prices, the second big increase in two weeks.

“My electricity bill [last month] was so high that I could not pay it, because do I pay the bill or buy food or provide for my children?” Khan told Arab News.

Muhammad Amir Khan, a driver with a private company, holds his electricity bill of Rs28,457 ($95.99) on September 18, 2023, in Karachi, Pakistan. (AN Photo)

“And in case of non-payment of the bill, if my electricity is disconnected then I will be forced to live in the darkness because I don’t have any other resources.”

“How can I carry on with an income that is less than the electricity bill I’ve been handed?”

Inflationary pressures are hitting the masses hard. August data from Pakistan’s statistics bureau showed a slight easing from July’s 28.3 percent inflation rate, but food inflation remained elevated at 38.5 percent.

Financial expert Ali Nawaz said low-income groups across the country were unable to make ends meet as food inflation and record power bills had increased their cost of living significantly.

“Higher electricity bills have reduced their disposable income to a very large extent, which has been impacting their livelihood,” Ali said. “They are unable to fund their daily living, they are unable to fund their health care expenditure, they are unable to fund their food-related expenses.”

“We should focus on reducing electricity prices as soon as possible by focusing more on alternative energy sources so we can give some relaxation to the common people,” Ali added.

But what is driving electricity prices in Pakistan?

One is the cost of non-renewable fuel resources such as gas, furnace oil, diesel and coal while the other is the rising value of the US dollar and the depreciating rupee.

Energy purchases account for most of Pakistan’s import bill. As the rupee withers against the dollar, imported fuel has become costlier.

The IMF deal-mandated hike in electricity prices has not helped.

The lender had pointed out that liquidity conditions in the power sector were acute, with a buildup of arrears and frequent power outages. The arrears — a form of public debt that builds up due to subsidies and unpaid bills — were a major issue in the eight months of negotiations between the IMF and Islamabad before a deal was reached in June.

An activist of Pakistan's right wing religious party Jamaat-e-Islami holds a placard reading, "withdraw the additional electricity bills and the government should end the patronage of IPPs contracts" during a demonstration against the surge in electricity prices in Peshawar on September 18, 2023. (AFP/File)

Debts to power generation companies have accumulated to nearly 2.6 trillion rupees ($9.04 billion), according to official figures, which show a separate government debt of around 1.6 trillion rupees ($5.56 billion) to the gas sector. The power sector is also beset by theft, which needs to be overcome.

With the recent tariff hikes, the per unit price of electricity has gone up to Rs35.57 for off-peak electricity hours and Rs41.89 for on-peak hours. Previously, the rates were Rs19.66 for off=peak hours and Rs25.98 for on-peak times. The per unit rates, with the addition of various taxes, have increased to Rs53-63 for different consumer categories. 

Another reason for the high cost of electricity is “capacity payments” to Independent Power Producers (IPPs), private entities that own facilities to generate electric power for sale to end users. Pakistan’s energy mix consists of 58.8 percent thermal power, which means the country is heavily dependent on IPPs. But contracts entered into with the independent producers are widely believed to be skewed in favor of the companies.

Among major criticisms of IPP contracts is that they require the government to make capacity payments even when power generated is not fully utilized. Experts say the arrangement leads to a high cost of electricity which augments the production costs of factories and industrial units. IPPs have also been accused of making exorbitant profits and dividends on capital invested under existing contracts and of over-invoicing and misreporting, while experts and politicians have called for a heat rate audit.

Representatives from the Power Division told Senate last month capacity payments to IPPs for the current fiscal year had reached a staggering Rs1.3 trillion.

In a briefing to journalists earlier this month, caretaker Prime Minister Anwaar-ul-Haq Kakar admitted problems with IPP agreements and said his government was “thoroughly” discussing its contractual obligations with the producers.

“We are on a course where we feel that we should find some sort of resolution, as everyone feels that they are uneven contracts,” the PM said, adding that he would share more details in due course of time.

Election regulator issues preliminary delimitation report as Pakistan heads toward polls

Updated 27 September 2023

Election regulator issues preliminary delimitation report as Pakistan heads toward polls

  • The Election Commission of Pakistan last week said it would hold polls in late January
  • Pakistan’s National Assembly comprises 266 general seats, 60 reserved for women and 10 for non-Muslims

ISLAMABAD: Pakistan’s election regulator issued the preliminary delimitation report of constituencies on Wednesday, with the completion of the exercise bringing it closer to holding polls in January 2024 as it said last week.
In a notification released on Aug. 17, the ECP said the initial delimitation process would be completed on Oct. 7 and preliminary proposals for delimitation, along with the report, would be published on Oct. 9.
However, the ECP announced last week it would hold elections in the last week of January 2024 and would instead complete the delimitation process by Nov. 30, instead of Dec. 14 as originally stated.
Polls were supposed to take place within 90 days of the parliament’s dissolution, but the election regulator said it needed more time to redraw hundreds of federal and provincial constituencies following the latest population census approved by the previous government in August.
“The share of seats in the National Assembly and in the Provincial Assemblies in respect of each district has been worked out on the basis of the final results of the 7th Digital
population and Housing Census-2023, officially published on 7th August, 2023,” the ECP said in a notification and an accompanying report.
As per the report, a copy of which is available with Arab News, the National Assembly comprises 266 General Seats while 60 additional seats have been reserved for women, and 10 more for non-Muslims.
Of these seats, Punjab has been allocated the most with 141, followed by Sindh with 61, the northwestern Khyber Pakhtunkhwa (KP) with 45, southwestern Balochistan with 16, and the capital city of Islamabad has been allocated 3 seats.
Punjab has the most number of provincial seats as well at 371, followed by Sindh with 168, KP with 145, and Balochistan at 65.
Pakistan will head to the polls after over a year of intense political turmoil and economic meltdown. Business leaders in Pakistan have been urging authorities to bring political stability to the cash-strapped nation which has seen a record devaluation of the rupee and soaring inflation in the past year-and-a-half.

Pakistan cricket team arrives in India after 7 years for upcoming World Cup

Updated 27 September 2023

Pakistan cricket team arrives in India after 7 years for upcoming World Cup

  • Pakistan will play warm-up matches against New Zealand and Australia on Sept. 29, Oct. 3 respectively
  • The last time Pakistan’s cricket team set foot on Indian soil was in 2016 during the T20 World Cup of that year

ISLAMABAD: Pakistan’s national cricket team arrived in India on Wednesday after seven years to take part in the upcoming ODI World Cup tournament, the Pakistan Cricket Board (PCB) confirmed in a statement.
The last time Pakistan played cricket on Indian soil was in 2016 when former captain Shahid Khan Afridi led the green shirts in the T20 World Cup of that year.
Political tensions between the nuclear-armed South Asian neighbors mean they haven’t played a bilateral cricket series against each other in over a decade. The two teams only lock horns in global cricket tournaments at neutral venues.
“Pakistan team has landed in Hyderabad, India,” the PCB said in a statement. A video accompanying the statement showed Pakistan captain Babar Azam, vice-captain Shadab Khan, Shaheen Shah Afridi, and others exiting the plane with their suitcases.

This screengrab taken from a video shared by Pakistan Cricket Board shows the Pakistani team walking out of the passenger jetway at the Rajiv Gandhi International Airport in Hyderabad, India on September 27, 2023, ahead of ICC World Cup 2023. (Courtesy: PCB/Screengrab)

Pakistan left for India during the wee hours of Wednesday, traveling to Dubai where they were joined by Bowling Coach Morne Morkel while Team Director Mickey Arthur will join the squad in India, the PCB said.
Only two players from Pakistan’s current squad have traveled to India before: Mohammad Nawaz, who was part of Pakistan’s 2016 T20 World Cup squad, and Agha Salman, who was in the Lahore Lions’ squad for the Champions League T20.
Skipper Babar Azam’s side will play two warm-up matches against New Zealand and Australia on Sept. 29 and Oct. 3 respectively before they begin their World Cup campaign against the Netherlands on Oct. 6.
Pakistan will face India in Ahmedabad on Oct. 14 where over 100,000 fans are expected to attend the high-octane clash.

Pakistan agree contract deals that will allow players to get share of ICC revenue

Updated 27 September 2023

Pakistan agree contract deals that will allow players to get share of ICC revenue

  • There had been deadlock between the cricketers and Pakistan’s cricket board since contracts expired on June 30
  • Three Pakistani cricketers in the top category will get a monthly retainer of $15,600, says Pakistan Cricket Board

ISLAMABAD: The Pakistan Cricket Board has agreed a “momentous” three-year central contract deal with its international squads that will include players getting a proportion of International Cricket Council revenue.
There had been deadlock between the squads and the PCB for several months since the contracts expired on June 30, with the players asking for their share in the revenue the board gets from the ICC, the game’s governing body.
The new three-year contract is backdated to July 1, 2023, but the cricket board said the performance of the players would be reviewed every 12 months.
“As many as 25 cricketers will be offered a momentous deal that will include a proportion of ICC revenue,” the PCB said in a statement on Wednesday.
It is the first time the PCB has merged the red-ball and white-ball contracts of the players, saying it is “aimed at promoting fairness and a transparent selection process.”
Each player in the four categories received a raise of more than 100 percent. Three in the top category, Babar Azam, Mohammad Rizwan and Shaheen Shah Afridi, will get a monthly retainer of $15,600.
“It is a historic deal,” skipper Babar said. “It has been a lengthy and, at times, challenging negotiation process, but I believe we have reached a fair and beneficial agreement for both parties.”
The players will receive a share of three percent of ICC revenue, which will be around $1 million. The PCB will be earning around $34 million per year from the ICC.
Besides getting a monthly retainer, there is a raise of 50 percent in match fees for players who feature in test matches, an increase of 25 percent for ODIs and 12.5 percent for T20s.
The PCB also agreed that the centrally contracted players can play in two other T20 leagues aside from the Pakistan Super League.
“I am pleased to announce that after lengthy negotiations the PCB has come to a financial agreement with the players,” said Zaka Ashraf, chairman of the PCB managing committee.
Category A: Babar Azam, Mohammad Rizwan and Shaheen Shah Afridi
Category B: Fakhar Zaman, Haris Rauf, Imam-ul-Haq, Mohammad Nawaz, Naseem Shah and Shadab Khan
Category C: Imad Wasim and Abdullah Shafique
Category D: Fahim Ashraf, Hasan Ali, Iftikhar Ahmed, Ihsanullah, Mohammad Haris, Mohammad Wasim Jr, Saim Ayub, Salman Ali Agha, Sarfaraz Ahmad, Saud Shakeel, Shahnawaz Dahani, Shan Masood, Usama Mir and Zaman Khan.

Despite setbacks, ex-PM Khan’s party hopeful of winning upcoming Pakistan elections

Updated 27 September 2023

Despite setbacks, ex-PM Khan’s party hopeful of winning upcoming Pakistan elections

  • Khan’s PTI party will secure majority due to its ‘potent election strategy,’ says senior leader
  • Legal, electoral experts say credibility of polls without PTI and its leaders would be questioned

ISLAMABAD: Despite suffering political setbacks, desertions and a nationwide crackdown against its leaders and supporters, a senior leader of former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) said on Wednesday the party would secure the majority in the upcoming elections due to its “potent election strategy.”

Ousted via a parliamentary vote in April 2022, ex-PM Khan’s popularity has surged among the masses according to opinion polls. However, the cricketer-turned-politician has suffered major political blows since May 9, when hundreds of PTI leaders and supporters were arrested following violent protests by his supporters that saw military installations and government buildings attacked in many parts of the country after his brief arrest.

Khan himself has been in jail since August after he was convicted by a court for illegally selling state gifts during his tenure as prime minister and was handed a three-year imprisonment sentence. Pakistan’s election regulator subsequently disqualified him from holding any office for five years following the conviction. While the Islamabad High Court suspended the conviction on Aug. 29, Khan remains in jail in yet another case where he is accused of leaking the contents of a secret letter. PTI Vice Chairman Shah Mahmood Qureshi and the party’s president, Chaudhry Parvez Elahi, are also in jail on separate charges.

Despite the setbacks, the PTI is preparing for the upcoming elections which were scheduled to be held in November but will most likely be delayed to early next year after the previous government of ex-PM Shehbaz Sharif approved the results of a population census days before dissolving the parliament in August. The Election Commission of Pakistan (ECP) is bound by law to redraw hundreds of constituencies based on the results of the latest census, an exercise that could delay polls to February and beyond.

“We have worked out a potent election strategy to field our candidates in all constituencies across Pakistan and we are sure to win a majority in the polls,” Barrister Gohar Ali Khan, a PTI spokesperson and member of the party’s core committee, told Arab News.

Khan referred to the IHC’s Aug. 29 decision, saying that the former prime minister is “fully eligible” to contest elections.

“As per law, Imran Khan and all other PTI leaders are eligible to file their nomination papers even from jails to contest polls,” Khan said. “Once the nomination papers are filed, we will seek relief from the courts and the ECP for a level-playing field.

“We are hopeful Imran Khan will be out of jail soon and he will lead the party’s election campaign.”

He said Khan was far more popular than his political rivals hence it would be difficult to rig the upcoming elections.

Electoral and legal experts said questions would be raised about the upcoming election’s credibility if the PTI and its chairman were not allowed to take part in it.

“All electoral contestants including PTI ticket-holders should be given equal opportunity to contest polls without any fear and favor to ensure transparency of elections,” Muddassir Rizvi, director of programs at the Free and Fair Election Network (FAFEN) in Islamabad, told Arab News.

“The party should be allowed to nominate contestants of its choice, otherwise it will seriously dent the credibility of the polls,” he said, suggesting that the ECP should deploy police and paramilitary troops instead of army personnel on polling day to avoid any controversies, given the PTI’s tense relations with the military.

Advocate Abid Saqi said it was premature to speak on Khan and the PTI’s political future because of the unpredictable nature of Pakistani politics.

“All polls and surveys at the moment show Imran Khan is by and large the most popular leader, but the fact is he is in jail,” Saqi told Arab News. “His conviction in the Toshakhana (state repository) case is suspended and he can contest polls, but what if he is convicted in another case before elections and that conviction stays during the electoral process,” he asked.

“Legal questions aside, elections without the PTI and its leaders would remain disputed,” he added.

Pakistan’s Punjab closes schools for four days amid surge in conjunctivitis cases

Updated 27 September 2023

Pakistan’s Punjab closes schools for four days amid surge in conjunctivitis cases

  • All public, private schools across Punjab to remain closed from Thursday to Sunday
  • Local media reports say state-run hospitals in Punjab treating between 500-600 patients

ISLAMABAD: Schools throughout Pakistan’s most populous Punjab province would remain closed for four days amid a surge in “pink eye” or conjunctivitis cases, the province’s School Education Department said in a notification on Wednesday.

Punjab has been grappling with a surge in conjunctivitis cases, with local media reports saying the number of patients seeking treatment in state-run hospitals across the province stand between 500-600.

Conjunctivitis, commonly known as “pink eye” condition, is an inflammation or infection of the conjunctiva, the clear, thin tissue that lines the inside of the eyelid and covers the white part of the eye. Doctors say conjunctivitis is a highly contagious disease that primarily spreads through direct contact with an infected person.

“In the wake of conjunctivitis/pink eye infection among school kids, the competent authority is pleased to announce that all public and private schools across the province shall remain closed from Thursday 28-09-2023 till Sunday 1-10-2023,” the notification read.

The School Education Department further said that schools would reopen across the province on Monday, Oct. 2 and would be required to follow all standard operating procedures to prevent the spread of the infection.

Punjab Caretaker Chief Minister Mohsin Naqvi toured the Mitha Teaching Hospital near Texali Gate in Lahore on Wednesday, saying that the situation regarding the eye infection remains “concerning.”

“ACs not working, non-operational X-ray machine, doctors with pink eye in operation theaters,” Naqvi wrote on social media platform X.

“We have set a 7-day deadline for the Health Department to address these issues.”

Pakistan’s southern port city of Karachi and other urban areas of Sindh province witnessed a surge in pink eye infections during the first week of September.

Doctors had advised patients to seek treatment for the condition and avoid self-medication.