In a startling revelation, experts have unveiled the primary reason behind Pakistan's soaring electricity tariffs, attributing it to a linkage with the US inflation index. The Sustainable Policy Institute (SPI) detailed this finding during a briefing to the Council of Economic and Energy Journalists (SAGE), highlighting that Pakistani consumers bear the brunt of US inflation impacts on Independent Power Producers (IPPs). According to SPI's Energy Research Fellows Dr. Khalid Waleed and Ahad Nazir, IPP contracts with the Pakistani government are indexed to US inflation, causing electricity prices to fluctuate in tandem. Dr. Khalid Waleed emphasized that regardless of fluctuations in the US dollar's value, electricity tariffs in Pakistan continue to rise due to US inflation. SPI data revealed a staggering 253% increase in tariff components from 2019 to 2024, with capacity charges escalating significantly.

 Moreover, the briefing underscored that local inflation compounded the issue, further inflating electricity costs borne by the public. Over the past four years, interest payments and working capital for IPPs have collectively driven up unit costs by 343% and 716%, respectively. The revelations have sparked concerns over the sustainability and affordability of electricity in Pakistan amidst economic challenges.

 Credit: Independent News Pakistan (INP)