Amir Saeed

A comprehensive review of electricity tariffs, focusing on consumer affordability, is needed to create a more equitable energy environment in Pakistan. Talking to WealthPK, Dr Naveed Arshad, a member of Lahore University of Management Sciences’ Energy Institute, said that the current energy landscape in the country was dominated by high electricity bills, which were unsustainable for many households. “The rising costs have compelled consumers to cut back on necessities, exacerbating poverty levels and limiting access to electricity for low-income families.” “Prioritising equity and transparency in pricing schemes should be a top priority for this assessment,” he said. Arshad pointed out that taxes played a major role in raising electricity bills as energy tariffs consisted of a complicated combination of various charges such as an 18% General Sales Tax and 1.5% to 2% provincial electricity duties.

He lamented that these charges coupled with already exorbitant bills brought on by capacity payments and currency fluctuations pushed the ultimate costs that customers must pay to unaffordable levels. “Reconsidering these tax patterns can greatly reduce financial strain on consumers and increase accessibility to electricity.” Meanwhile, speaking to WealthPK, Kaiser Bengali, former economic adviser to the Sindh government, highlighted that capacity payments to private IPPs couldn’t be solely blamed for the high energy tariffs as such payments accounted for less than 15% of total capacity payments. “Policymakers need to focus on systemic reforms that could improve the overall efficiency and reliability of the energy sector.” “The government should introduce strategic reforms to streamline energy sector operations and modify tariffs to attain a more sustainable energy model. This includes reducing inefficiencies, modernising infrastructure, and exploring renewable energy sources to reduce reliance on imported fuels.

By doing this, the government can build a more resilient energy structure, shield consumers from abrupt price changes and foster long-term affordability,” Bengali explained. He said that introduction of a tiered pricing system would ensure that those who consumed less energy paid lower rates. “This strategy would promote energy saving while also lowering the cost of electricity for disadvantaged groups.” He further said that encouraging collaborations with non-governmental organisations to launch financial literacy initiatives would enable customers to control their energy consumption and costs more effectively. Bengali said that workshops on budgeting and energy efficiency could provide households with the information they needed to make prudent consumption decisions. “Fostering affordability and raising awareness would help the country achieve a more equitable energy landscape.”

Credit: INP-WealthPk