KARACHI: Dr. Khalid Waheed, Research Fellow at the Sustainable Development Policy Institute (SDPI), has warned that India’s suspension of the Indus Water Treaty (IWT) could drive up electricity costs in Pakistan by reducing hydropower generation and forcing reliance on expensive fossil fuels.
Speaking at a seminar organised by the Council of Economic and Energy Journalists (CEJ), Dr. Waheed said hydropower remains Pakistan’s cheapest energy source, but even a 1% reduction in river flows could increase generation costs by Rs 5.8 billion. A further one-rupee depreciation of the rupee would add Rs 8.2 billion to expenses.
He noted that Pakistan’s recent agreement with the IMF under the Climate Resilience Program requires phasing out slab-based billing and moving to cost-reflective tariffs, reducing subsidies to only 40% of consumers, disbursed via the BISP. Instead of recurring subsidies, he suggested providing solar panels to low-income households to cut grid dependence and fiscal strain.
Dr. Waheed also cautioned that the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) could penalise Pakistan’s carbon-intensive exports, especially textiles, and urged urgent adoption of low-carbon technologies to protect competitiveness.
