Expensive electricity driving inflation, says energy expert

Energy expert and former Managing Director of PEPCO, Tahir Basharat Cheema, has said that high electricity prices remain one of the biggest contributors to inflation and economic challenges in Pakistan.

Speaking to media, Cheema argued that the rising cost of electricity has placed significant pressure on households, businesses and industries, making it difficult for the economy to achieve sustainable growth. According to him, expensive power generation and distribution costs have increased production expenses across multiple sectors, ultimately pushing up the prices of goods and services.

The former PEPCO chief stated that costly electricity has brought the economy close to a critical point, affecting industrial competitiveness and reducing the purchasing power of consumers. He emphasized that energy costs are deeply linked to inflation and economic performance, making power sector reforms essential for long-term stability.

Cheema attributed the high cost of electricity primarily to agreements signed with Independent Power Producers (IPPs). He maintained that certain contractual arrangements have resulted in substantial financial obligations for the power sector, which are ultimately passed on to consumers through electricity bills.

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The energy expert also highlighted the impact of fixed charges and additional taxes imposed on electricity consumers. He suggested that policymakers should review these charges and explore measures to reduce the financial burden on households and businesses.

According to Cheema, lowering electricity costs could help stimulate economic activity, support industrial growth and provide relief to consumers struggling with rising living expenses. He stressed that meaningful reforms in the energy sector would not only reduce inflationary pressures but also strengthen Pakistan’s overall economic outlook.

His remarks come amid ongoing discussions about energy pricing, power sector sustainability and broader efforts to address inflation. Economists and industry representatives have repeatedly called for structural reforms aimed at improving efficiency, reducing costs and ensuring affordable electricity for consumers across the country.