ISLAMBAD, AUGUST 4: High-level sources told Bloom Pakistan that the federal government has been presented with a massive relief plan that calls for a lump sum payment of Rs. 4 trillion to be made to Independent Power Producers (IPPs) in exchange for a reduction of Rs. 5 per unit in electricity bills for all categories of consumers.
In order to reduce the cost of power by at least Rs. 5 per unit, the Ministries of Finance and Energy have suggested to the government that capacity payments that are due in the next three to five years be combined and paid in advance to IPPs.
Sources stated that by pooling cash and making these lump sum payments in advance, the government hopes to lessen the IPPs’ payment burden and revolving credit concerns. The proposal states that the Ministry of Energy has recommended that the Finance Division take the lead in setting up the necessary funding.
The Ministry of Finance would arrange for the required sum to be sent to the Ministry of Energy, which would then distribute the money among IPPs. According to further sources, before taking any action, the Finance Division wants the International Monetary Fund (IMF) to approve this idea.
Though no decision has been made yet, it is important to note that Prime Minister Shehbaz Sharif has been briefed on these recommendations. For the last week, representatives from the ministries of finance and energy have been working together to create a workable strategy that would prioritize lowering electricity prices.
