As citizens grapple with soaring electricity bills attributed to ‘unfavourable’ agreements with independent power producers (IPPs), Federal Minister for Energy (Power Division) Awais Leghari announced imminent ‘permanent relief’ for consumers.
During an appearance on ‘Aaj Shahzeb Khanzada Kay Sath,’ Leghari revealed that a comprehensive review of IPP-related issues had concluded, promising forthcoming ‘good news.’
The Pakistan Muslim League-Nawaz (PML-N) government has faced national protests due to prolonged outages and escalating bills this summer. Criticism has also centred on the IPP agreements, which the government acknowledges as contributing to the region’s highest electricity tariffs.
Leghari indicated that unilateral contract alterations were improbable, citing potential repercussions similar to the ‘Reko Diq-like situation.’
Addressing renegotiations in 2019, Leghari noted that the prior administration led by Imran Khan granted concessions to IPPs through arbitration, missing a crucial opportunity for more favourable terms.
He also mentioned that the investigation initiated by former minister Muhammad Ali into the IPPs has progressed. This inquiry began with a 2019 mandate for Ali to audit and renegotiate the power sector’s purchase agreements.
Leghari added that current negotiations to reduce electricity tariffs are ongoing with all power plants in the country.
Analysts attribute Pakistan’s energy crisis largely to past IPP agreements, often executed without a thorough impact assessment. These contracts have burdened consumers with the highest rates globally, where taxes and capacity charges make up 70% of their bills.
Over the past decade and a half, the country has lost nearly Rs5,082 billion to unmanaged circular debt, translating to an annual loss of Rs370 billion.
Since July 2018, power purchase prices have surged by 95.82%, with IPP contract durations set to continue until around 2050.
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