Electricity bill in Pakistan are now more than house rents due to IMF-driven reforms

In Pakistan, electricity bills have begun to outpace home rental rates for many, as tariff increases and other reforms driven by the International Monetary Fund (IMF) loan conditions have ignited protests across the country. The sharp rise in electricity costs has become a focal point of public outrage in a nation where nearly half the population lives on less than $4 a day.

Since 2021, electricity prices in Pakistan have surged by a staggering 155%, largely due to the government's efforts to increase industrial and retail rates to secure loans from the IMF. The energy sector, long plagued by inefficiencies and theft, has now become a major pain point as the country struggles with a chronic economic crisis.

Inflation, currently at 12%—the highest in Asia—has severely eroded purchasing power. Consequently, electricity consumption has dropped to its lowest level in four years as both households and businesses increasingly turn to solar power to escape the soaring costs of the predominantly gas-powered national grid.

In July, as Pakistan secured a new $7 billion loan from the IMF, residential electricity prices jumped by an average of 18% per unit. This has led to a situation where electricity bills, traditionally a small part of household expenses, have now surpassed rent payments that typically range from $100 to $700 per month, according to Samiullah Tariq, head of research at Pakistan Kuwait Investment Co.

The widespread protests by citizens, business groups, and opposition parties have forced Prime Minister Shehbaz Sharif to announce a Rs 5,000 crore ($180 million) subsidy over the next three months. This subsidy is aimed at cushioning the blow for the poorest electricity users.

As part of the IMF bailout program, Pakistan and the IMF have agreed on a plan to restore the energy sector's viability. This plan includes cost-cutting measures and the privatization of state-owned power distribution companies. According to the power regulator, Pakistan loses about 16% of the electricity it generates due to theft and transmission and distribution losses.