- Reducing electricity tariffs after talks with generating companies: Leghari.
- ISMO says it will enable consumers to buy electricity like stocks.
- “A program is designed to boost energy consumption in winter.”
ISLAMABAD: The government aims to reduce tariffs by Rs 8-10 per unit, Energy Minister (Energy Department) Owais Leghari said on Thursday, as five independent power producers (IPPs) canceled their contracts, a move expected to save the national exchequer worth Rs 411. One billion rupees.
“We will reduce power tariffs in mutual consultation with electricity generating companies,” Leghari said during a press conference following the federal government meeting in Islamabad.
Earlier in the day, Prime Minister Shehbaz Sharif announced that five independent power producers have “voluntarily” agreed to cancel their power purchase agreements with the federal government, providing Rs60 billion in annual relief to inflation-hit consumers.
The rising cost of electricity has become a controversial political issue, with opposition parties exploiting public discontent to criticize the current government’s handling of the energy sector and agreements with independent power producers.
The burden of rising electricity prices falls disproportionately on middle- and low-income segments of society, fueling popular anger and eroding confidence in the government’s ability to manage the economy.
Analysts noted that a successful renegotiation with both domestic and international independent power producers would significantly reduce tariffs, enhance industrial competitiveness, and increase public confidence in the government’s ability to manage the economy effectively.
Giving details of the development, the Energy Minister said the government had conducted a survey to ascertain which plants were no longer needed.
“We started talks with five independent power producers and studied the energy agreements,” he said, adding that they ended in mutual consultation.
“The decision will provide Rs60 billion annual relief to electricity consumers and cumulatively save Rs411 billion to the national exchequer,” Leghari said.
Hoping to achieve the target of reducing power tariff by Rs 8-10 per unit within a few months, the minister said the government is taking various measures to ease the burden on the masses.
He also thanked the Chief of Staff of the Army, Lieutenant General Assem Mounir, for his help in renegotiating the agreements. “We will now look to work with the remaining independent power producers,” he added.
The Energy Minister also noted the establishment of the Independent System and Market Operator (ISMO), which he described as a “huge win” for his ministry. “After it is operational, consumers will be able to buy electricity like stocks,” he said.
The previous day, the Ministerial Committee on Energy (CCoE) approved the establishment of the ISMO, an independent multi-player market, for power generation and procurement to create a competitive environment and gradually end the government’s role as a sole buyer of electricity.
“We are creating an independent environment for buying and selling electricity,” Leghari said, adding that power buyers will not rely solely on the Central Power Procurement Agency (CPPA-G).
Furthermore, he said the government was considering introducing a program that he said would increase electricity use in the winter. He added: “In this regard, the decision will be made after gaining the confidence of all parties concerned.”
