Pakistan raises power prices amid energy crisis despite rampant inflation

Pakistan on Tuesday raised electricity prices to match rising generation costs amid a global energy crisis and a heatwave, even as the country grapples with its highest inflation in over a decade, the power minister said.

Inflation last month reached 21.3%, driven mainly by rising food costs, and the country also faces fast-depleting foreign reserves, a depreciating currency and widening current account deficit.

“Cabinet has approved an increase in electricity tariffs but lifeline (poor) consumers will not be affected,” Power Minister Khurram Dastagir Khan told reporters in Islamabad, adding that the increase would not apply to them.

Pakistan’s monthly fuel oil imports are set to hit a four-year high in June, Refinitiv data shows, as the country struggles to buy liquefied natural gas for power generation amid a heatwave that is driving demand.

Higher energy imports have hit the economy as the country struggles to boost foreign exchange. The rupee has lost 20% of its value in 2022. Reserves have fallen to as low as $9.3 billion, hardly enough to pay for 45 days of imports.

Pakistan this month reached a staff-level agreement with the IMF for $1.17 billion in critical funding under a resumed bailout package.

The country is also pushing to tap other avenues for power.

The minister said that nuclear power production had risen after the refuelling of one plant.

From the beginning of July, the K2 plant has been operating at full capacity.

(Reporting by Syed Raza Hassan; Editing by Nick Macfie)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor