Minister for Energy (Power Division) Awais Leghari said on Thursday the government was aiming for an Rs8-10 per unit tariff reduction as five independent power producers (IPPs) cancelled their contracts, a move expected to save the national exchequer Rs411 billion.
“We will reduce the power tariff in mutual consultation with generation companies,” Leghari said while addressing a press conference after the federal cabinet’s meeting in Islamabad.
Prime Minister Shehbaz Sharif, earlier in the day, announced that five IPPs have “voluntarily” agreed to cancel their power purchase agreements with the federal government, providing Rs60 billion in annual relief to inflation-hit consumers.
The high cost of electricity has become a contentious political issue, with opposition parties leveraging public dissatisfaction to criticise the incumbent government’s handling of the energy sector and agreements with independent power producers (IPPs).
The burden of high electricity tariffs falls disproportionately on the middle and lower-income segments of society, fueling public outrage and eroding trust in the government’s ability to manage the economy.
Analysts noted that a successful renegotiation with both local and international IPPs would drastically reduce tariffs, boost industrial competitiveness, and increase public trust in the government’s ability to effectively manage the economy.
Giving details regarding the development, the energy minister said that the government had surveyed to ascertain which plants are not needed anymore.
