Wednesday, July 24, 2024

Inflation in US and Electricity Prices in Pakistan Will Rise – Shocking Revelation About Electricity Rates, SDPI Media Briefing

Shocking revelations have emerged regarding the exorbitant electricity rates in Pakistan. In a briefing to the Council of Economic and Energy Journalists (CEEJ) in Karachi, the Sustainable Development Policy Institute (SDPI) revealed that inflation will occur in the US, and electricity prices will rise in Pakistan.

During the media briefing, SDPI research fellows Dr. Khalid Waheed and Ahad Nazir explained that Independent Power Producers (IPPs) are charging Pakistanis based on US inflation. The electricity agreements between the Government of Pakistan and IPPs are indexed to US inflation.

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Dr. Khalid Waheed disclosed that US inflation is also indexed in IPP tariffs, and even if the US dollar’s value decreases, electricity tariffs in Pakistan will still rise. He explained that due to US inflation, there was a 253% increase in tariff components from 2019 to 2024. According to the data, in 2019, the capacity charges in Pakistan were Rs. 3.26 per unit. By 2024, the capacity charges had increased to Rs. 10.34 per unit. Along with US inflation, the impact of local inflation will also be included in the capacity charges, which the public will bear.

The briefing revealed that due to the increase in interest rates in the country, interest payments on electricity units have increased by 343% in four years. The working capital of IPPs has made electricity per unit 716% more expensive in four years. The electricity tariff includes 12 to 20% tax, while 70% of the cost is capacity charges. Dr. Khalid Waheed explained that Pakistan’s electricity generation capacity is 43,000 megawatts, while the transmission capacity is 23,000 megawatts. The impact of capacity charges on citizens will further increase due to solarization in the country. He mentioned that there is political gain in setting up power plants but not in laying transmission lines.

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Mazhar Ali Raza
Mazhar Ali Raza
Mazhar Ali Raza is a senior journalist from Karachi. He has served more than twenty years in journalism. He was recently associated with the dunya media group as a senior business reporter from the last eleven years . Prior to that he has worked for CNBC for the period of four years. His major beats were the energy auto banking and agriculture sector . He has covered many seminars and exhibitions in Pakistan and abroad as well .
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