The federal government of Pakistan is planning to reduce electricity tariffs by up to Rs10 per unit following the termination of power purchase agreements with five independent power producers (IPPs), which is expected to save the national treasury Rs411 billion.
Energy Minister Awais Leghari made this announcement during a press conference after a federal cabinet meeting in Islamabad.
Earlier in the day, Prime Minister Shehbaz Sharif revealed that five IPPs had “voluntarily” agreed to cancel their contracts with the government, a move estimated to save Rs60 billion annually.
The high cost of electricity has become a significant political issue, with opposition parties criticizing the government’s management of the energy sector and its agreements with the IPPs.
The burden of high electricity tariffs has particularly affected middle and lower-income groups, leading to public dissatisfaction and increased pressure on the government. Analysts believe that a successful renegotiation with both local and international IPPs could lead to reduced tariffs, improved industrial competitiveness, and restored public confidence in the government’s economic management.
Leghari explained that the government had conducted a survey to identify power plants that were no longer needed. Following this, discussions with five IPPs led to the mutual decision to terminate their agreements. This step, he noted, would provide an annual relief of Rs60 billion to electricity consumers and save Rs411 billion overall.
The energy minister expressed optimism that electricity tariffs could be reduced by Rs8-10 per unit in the coming months, as the government implements measures to ease the financial burden on citizens. He also thanked Chief of Army Staff (COAS) General Asim Munir for his support in renegotiating the agreements and mentioned that further talks with other IPPs are planned.
In addition, Leghari highlighted the establishment of an Independent System and Market Operator (ISMO), which he described as a major achievement for his ministry. Once operational, ISMO will allow consumers to purchase electricity in a manner similar to buying shares, creating a more competitive market. The Cabinet Committee on Energy (CCoE) recently approved the formation of ISMO, which aims to create an independent environment for power generation and trading, reducing reliance on the Central Power Purchasing Agency (CPPA-G).
Leghari also mentioned the government’s consideration of a new programme to increase electricity usage during the winter months, with further details to be discussed with stakeholders.
