Islamabad, July 10 2025: The Sustainable Development Policy Institute (SDPI) recently hosted a discussion titled, ‘Post budget dialogue on electricity pricing: Impact of fiscal priorities and tariff reforms’. The session brought together key energy experts and thought leaders to critically assess pressing issues faced by Pakistan’s power sector; focusing particularly on the complexities of electricity tariff structure calling to action urgent simplification and stakeholder engagement.
The session was moderated by Ubaid ur Rehman Zia – Senior Research Associate at SDPI with energy experts including, Tahir Basharat Cheema – President of the Institute of Electrical and Electronics Engineers Pakistan (IEEEP), Rehan Javed – Energy analyst and industrialist, Dr. Khalid Waleed – Senior Energy Associate and Ahad Nazir – Programme Manager from SDPI, Dr. Adeel Waqas – Principal of U.S. Pakistan Centre For Advanced Studies in Energy (USPCAS-E), and Sheikh Muhammad Iqbal – former CEO Pakistan Textile Council, now an independent consultant.
Rehan Javed touched on how the government needs to shift its current approach in order to encourage privatisation within the power sector and actualize the competitive future it envisions. He in particular appreciated KE for the technical and service level improvements it brought about in its territory post-privatisation and how it served as the template for other DISCOs to replicate. He urged institutions to support such strides to incentivise private investment into the sector, instead of presenting barriers time and time again which negate from achieving the end-goal.
At a national level he proposed the introduction of tariffs that better align with the industrial sector’s needs, enabling industries to better plan operations while ensuring equitable distribution of electricity costs. Javed also stressed upon the challenges posed by net metering and the glaring lack of regulations around power theft, stressing that effective policing is essential to address this persistent issue.
Tahir Basharat Cheema voiced concerns about the outdated and inefficient tariff structure, noting that it has remained largely unchanged since the 1960s when it was originally designed to suppress load; an objective that is no longer relevant today. He argued that the system needs a total revamp to cater to the evolving energy needs of the country where the concept of wholesale rates should be applied for excess consumption. He said that tariff is beyond the scope of either DISCOs, GENCOs, or IPPs, with government being responsible for updating it. Cheema also highlighted the necessity for increased investments in DISCOs, which are currently suffering due to inadequate funding and poor operational efficiency in certain regions.
He also advocated for the reduction of taxes from electricity bills and mentioned that the power system seems to be used to sustain FBR for revenue collection. He applauded the removal of TV license fees from electricity bills and making the boards of some DISCOs independent, terming these two steps as the silver lining. Cheema also expressed concern about the death threats being received by DISCOs representative because the prevailing issue of power theft. He argued that privatisation alone would not suffice and called for a more comprehensive approach to the sector’s challenges.
Ahad Nazir, Programme Manager at SDPI, pointed out the inefficiency in the use of energy, particularly for non-productive purposes. He also discussed about the country’s dependency on global fossil fuels and highlighted the structural issues in Pakistan’s energy sector, including circular debt and retiring power plants, which remain inadequately utilised.
Dr. Khalid Waleed emphasised the importance of incentivising productive electricity demand in Pakistan. He discussed the need to rationalise the subsidy system, particularly the cross-subsidisation by consumers, where 54% of the population enjoys protected electricity tariffs. Dr. Waleed also stressed the importance of creating a competitive energy market and reforming the power purchase agreements.
Dr. Adeel Waqas drew attention to the potential of technology to transform the energy sector. He emphasised the role of smart meters and digitalisation in reducing human intervention and corruption, while also improving operational efficiency. Waqas urged the government to trust academic institutions and entrust local engineering professionals in shaping the future of Pakistan’s power sector.
Sheikh Muhammad Iqbal spoke about the potential change in consumption patterns should the net metering policy be revised and advocated against the cross-subsidisation between electricity consumers.
The panellists collectively discussed the challenges faced by Pakistan’s energy sector, including the rising cost of generation, high-capacity component, the need for tariff reforms, and the impact of fiscal policies on energy pricing. They also identified critical gaps in the sector’s governance, stressing the importance of transparency, stakeholder involvement, and a more comprehensive approach to privatisation.
The session concluded with a call for urgent and comprehensive reforms to ensure a sustainable and equitable energy future for Pakistan. The discussion emphasised the need for a balanced approach, combining market-driven policies with government oversight and support.
