As part of discussions with the authorities, the International Monetary Fund has warned that new electricity hikes should not place additional burden on middle- or lower-income households.” Islamabad is pursuing a major tariff overhaul to meet conditions of a $7?billion IMF EFF loan, promising to end the decades-old cross-subsidy from industry to homes, said to eliminate roughly Rs?102?billion in subsidies and trigger a 1.1 percentage point jump in inflation.
However, middle-income consumers will suddenly pay about 50 per cent more for the same power. In fact, new fixed charges mean most residential users face increases of up to 76 per cent, while even the lowest-usage households are slapped with a Rs?400/month fee they never had. With more than 45 per cent of Pakistanis living below the poverty line, such shocks cut deep into already-shrinking family budgets.
Meanwhile, inflation has only begun to cool. After spiking near 40% in 2023, consumer prices remain a political tinderbox. Electricity carries heavy weight in the CPI, so raising tariffs now can reignite price pressures. In the eyes of many, this latest tug on tariffs feels like déjà vu (yet another Greek tragedy), where each reform seems to punish those who can least afford it.
The pain extends beyond the grid. Pakistan’s solar boom was sold as a ticket out of loadshedding, where families even resorted to borrowing and selling family silver to install rooftop panels, chasing the promise of zero bills. But policymakers are swiftly rewriting the rules. The net-metering revisions that halve buyback rates have turned savings into sour investments. From the looks of it, regulators now propose punitive, one-sided policies to address solar users. While the prime minister has ordered a review to ensure costs aren’t simply shifted from 466,000 solar households onto the other 37.6?million grid consumers, the fact that abolishing net-metering won’t fix the sector’s losses, which demand better management, has yet to gain relevance in the policy circles.
Underlying all this is a vicious circle of debt. The country’s power DISCOs haemorrhage roughly $1?billion a year to theft and inefficiency. Government reports note that poor collection rates, high losses, late subsidies, and infrequent tariff tweaks keep Discos in a perpetual fiscal strain.
A prime-ministerial panel has rightly warned that this constant unpredictability hurts everyone, calling for rationalising energy prices and refinancing debt so tariffs sit closer to regional norms.
In the end, there are no easy options. The country must choose between stabilising the economy or protecting its people, and so far, the scales have tipped on paper, not in parliament. True reform would address the waste and inefficiency that underlie these deficits instead of simply adjusting who pays. Under current pressures, every solution risks sparking the next crisis. *