KARACHI - Pakistan on Tuesday raised electricity prices to match rising generation costs amid a global energy crisis and a heatwave, even as the country grapples with its highest inflation in over a decade, the power minister said.

Inflation last month reached 21.3%, driven mainly by rising food costs, and the country also faces fast-depleting foreign reserves, a depreciating currency and widening current account deficit.

"Cabinet has approved an increase in electricity tariffs but lifeline (poor) consumers will not be affected,” Power Minister Khurram Dastagir Khan told reporters in Islamabad, adding that the increase would not apply to them.

Pakistan's monthly fuel oil imports are set to hit a four-year high in June, Refinitiv data shows, as the country struggles to buy liquefied natural gas for power generation amid a heatwave that is driving demand.

Higher energy imports have hit the economy as the country struggles to boost foreign exchange. The rupee has lost 20% of its value in 2022. Reserves have fallen to as low as $9.3 billion, hardly enough to pay for 45 days of imports.

Pakistan this month reached a staff-level agreement with the IMF for $1.17 billion in critical funding under a resumed bailout package.

The country is also pushing to tap other avenues for power. The minister said that nuclear power production had risen after the refuelling of one plant.

From the beginning of July, the K2 plant has been operating at full capacity.

(Reporting by Syed Raza Hassan; Editing by Nick Macfie)