Rs10-11/unit fall in power tariff likely: Cabinet clears revised pacts with 14 IPPs

ISLAMABAD: The federal cabinet on Tuesday approved revised agreements with 14 Independent Power Producers (IPPs), which may result in Rs10-11 per unit decrease in electricity prices.

The federal cabinet which met here with Prime Minister Shehbaz Sharif in the chair, approved the proposal of Power Division to review the contracts with 14 IPPs.

As a result of these revised agreements, a consensus was reached to reduce profits and costs for these IPPs by Rs802 billion. The statement issued by the PM Office said that an additional Rs35 billion will be deducted from the extra profits of these IPPs accrued over the past years, adding 10 of these IPPs are operating under the 2002 power policy, while four are part of the 1994 power policy.

Renegotiating or terminating contracts with IPPs: up to Rs300bn annual saving expected

Additionally, one of the IPPs under 1994 policy had its contract terminated. The renegotiated agreements with these IPPs are anticipated to yield total savings of Rs1.4 trillion throughout the duration of the contracts, translating to an annual savings of Rs137 billion, which will benefit the consumers.

The prime minister praised the revised agreements, describing them as a considerable achievement. He emphasised that the agreements would not only save the national kitty but also help in eradicating circular debt and lowering electricity prices.

The cabinet also approved the merger of the Ministry of Narcotics Control with the Ministry of Interior, as part of the government’s right-sizing initiative.

The Anti-Narcotics Division will now operate as a wing within the Ministry of Interior, while the Anti-Narcotics Force (ANF) will be an attached department of the ministry.

This merger is expected to result in annual savings of Rs183.25 million for the national treasury, primarily through reductions in administrative expenses, salaries, office maintenance and various operational costs. Additionally, the cabinet approved merger of Aviation Division with the Defense Division. The decision follows the principle of fiscal austerity, as Civil Aviation Affairs were previously managed under the Ministry of Defense until 2013.

The merger aims to improve airspace management and is projected to save Rs145 million annually in similar operational expenses.

The cabinet, based on a recommendation from the Cabinet Division, approved the addition of Section 45-A to the Public Procurement Rules, 2004. The new section allows a procuring agency to delegate all or part of its procurement process to another agency.

It also approved the National Commission for Minorities Act 2024, to be sent to Parliament for consideration, as per the recommendation of the Ministry of Human Rights.

The cabinet granted an extension of two years to Dr Muhammad Bashir’s contract as member of the Technical Environment Tribunal, Islamabad, on the recommendation of the Law and Justice Ministry.

Copyright Business Recorder, 2025