ISLAMABAD: Minister for Energy (Power Division), Sardar Awais Ahmad Khan Leghari, informed the National Assembly that the early termination of agreements with six Independent Power Producers (IPPs) is projected to save the government approximately Rs411 billion.
Responding to a written question, the minister stated that a dedicated Task Force on the Implementation of Structural Reforms in the Power Sector has been formed.
The task force is currently in discussions with IPPs to renegotiate contracts and lower tariffs.
He confirmed that the government had obtained written assurance from the IPPs indicating that the termination of Power Purchase Agreements (PPAs) and Implementation Agreements (IAs) was carried out without any coercion.
According to Leghari, the task force’s efforts have led to the termination of PPAs with six IPPs and the revision of agreements with eight bagasse-based power plants, resulting in tariff reductions.
In addition, 14 thermal IPPs have agreed to cut their tariffs.
The estimated long-term savings from the revised tariffs of the eight bagasse-based power projects stand at Rs238 billion.
Power Policies
While, adjustments to contracts with 14 thermal IPPs operating under the 1994 and 2002 Power Policies are projected to generate further savings of Rs922 billion over the remaining duration of the agreements.
Responding to another query, the minister stated that the federal government has remained actively engaged with IPPs as part of a broader effort to restructure the power sector and lower electricity costs for consumers.
He noted that the task force had submitted multiple reform proposals to the federal cabinet aimed at reducing prices and increasing efficiency within the sector.
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Leghari highlighted a recent major development: the prime minister’s announcement of a significant reduction in electricity tariffs across the board, which is part of a broader reform strategy including the renegotiation of IPP agreements.
This will result in a Rs7.41 per unit cut in electricity tariffs for all categories of consumers in their April 2025 bills, following regulatory approval.
Providing a comparison of tariffs over time, the minister noted that the national average consumer-end tariff in June 2024 stood at Rs48.70 per unit.
By April 2025, before applying the new reduction, the average was expected to drop to Rs45.05 per unit.
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With the announced Rs7.41 per unit reduction, the adjusted national average consumer-end tariff will be further lowered to Rs37.64 per unit.
Leghari also emphasized that these initiatives have received support from the International Monetary Fund (IMF) and are aligned with the structural reforms being implemented under the ongoing Extended Fund Facility (EFF) programme.
