Pakistan PM approves $179.5 million for low-income electricity consumers amid cost-of-living crisis

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The outdated infrastructure and inefficient power plants further exacerbate costs, while underutilization of domestic resources, such as hydropower and coal, add to the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