ISLAMABAD: Minister for Power, Sardar Awais Ahmad Leghari, has stated that the financial benefit of the revised contracts for Independent Power Producers (IPPs) will be Rs 1.1 trillion, which will either be passed or has been passed on to consumers.
He was responding to questions raised by members of the National Assembly Standing Committee on Power, which met on Thursday under the chairmanship of Muhammad Idrees.
The Minister explained that the revised contracts of 16 IPPs, established under the Power Policies of 1994 and 2002, will be presented to the Federal Cabinet in the coming days. “Contracts of five IPPs have been terminated, and the agreements of eight bagasse-based IPPs have also been revised. The revised agreements of the 16 IPPs are about to be presented to the Cabinet. The financial impact of these revisions will be about Rs 6 to Rs 6.50 per unit,” he said. He added that the next round will focus on government-owned power plants to review their Return on Equity (RoE).
Govt saved Rs1.1 trillion through talks with IPPs: Awais Leghari
He further stated that there was an opportunity to address the IPPs issue during the Imran Khan government, but it was not pursued. “Now, the incumbent government has addressed this matter, with the Prime Minister ensuring that even his relatives and friends are not spared in the process.”
The Minister also noted that there are eight or nine elements in the current tariff regime, and by revising these elements, electricity tariffs could be reduced by Rs 10 to Rs 12 per unit. He emphasised that the government is actively working on this.
In response to questions about various taxes on electricity bills, the Minister proposed that the Committee would invite the Chairman of the Federal Board of Revenue (FBR) to address these issues.
Addressing a query raised by Khurshid Ahmed Junejo regarding the Maximum Demand Indicator (MDI), Nepra’s representative Mubashir Bhatti informed the Committee that Rs 2.3 trillion are expected to be paid to the IPPs as capacity payments during 2024-25, which constitutes 75 percent of the total electricity cost. He explained that the imposition of fixed charges aims at meeting the capacity charge obligations.
He further stated that “the government had recognized over the last nine months that reducing electricity prices is a top priority. Since June 2024, electricity prices have been reduced by Rs 11 per unit for industry and by Rs 4 per unit in the overall pool price for other consumers. The current pool price of electricity is Rs 35 per unit, excluding taxes and surcharges. However, electricity is being provided to all categories of consumers at Rs 26 per unit (through the winter incentives package), which is competitive in the region.
“We are now working towards reducing electricity prices further in the next two to four months so that Pakistan’s rates are in line with competitive electricity rates in the region,” the Minister said. He added that while there is no definitive figure yet, the government is expecting a substantial tariff reduction.
The Minister also sought appreciation from the Committee for filing a review of KE’s generation tariff, which will have a financial impact of Rs 500 billion on KE and Disco consumers over the next five years.
Rana Muhammad Hayat, MNA, raised concerns about agriculture electricity rates, while MNAs from KPK discussed excessive load shedding in their areas.
Malik Taj, a Committee member, who claimed that his house was without electricity, and facetiously proposed that since the government is paying over Rs 2 trillion to IPPs as capacity payments, it should provide free electricity to consumers.
Shahryar Khan Mahar asked about the delay in reconstituting the Boards of Hesco and Sepco.
The Committee expressed grave concern over the high electricity bills and directed that the Ministry of Energy (Power Division) and Nepra take effective measures to reduce electricity rates and avoid additional taxes being charged under various headings to ease the financial burden on consumers. The Committee also decided to invite the Chairman of Nepra in the next meeting for a comprehensive briefing on this issue.
The Committee further directed that the Ministry of Energy (Power Division) engage parliamentarians in conducting surveys in their constituencies to combat electricity theft and prevent unnecessary load shedding in their areas.
The Committee appreciated the Ministry of Energy’s efforts in saving the government’s exchequer by revisiting the contracts of IPPs. However, it urged the Ministry to ensure that the benefits of these revisions are passed on to the electricity consumers.
Earlier, the Minister for Energy (Power Division) briefed the Committee, assuring them that the incumbent government is fully committed to reducing the financial burden on electricity consumers, with prices being gradually decreased. He further noted that approximately 70 percent of tube wells had been converted to solar energy, and electricity rates for the industrial sector had been reduced.
He assured the Committee that any constructive suggestions from the Committee would be welcomed and incorporated into policymaking to benefit electricity consumers.
The meeting was attended by MNAs Raja Qamar Ul Islam, Sheikh Aftab Ahmad, Syeda Nosheen Iftikhar, Rana Muhammad Hayat Khan, Muhammad Shaharyar Khan Mahar, Khurshid Ahmed Junejo, Nouman Islam Sheikh, Syed Abrar Ali Shah, Junaid Akbar, Malik Anwar Taj, Sher Ali Arbab, Syed Mustafa Kamal (via video link), Dr Tariq Fazal Chaudhary, Haji Imtiaz Ahmed Ch, Ali Afzal Sahi, and Movers Dr. Mahreen Razzaq Bhutto.
Copyright Business Recorder, 2025
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