Pakistan was in talks with China to run power plants with a mix of coal to save $1 billion annually, Prime Minister Shehbaz Sharif said on Tuesday.

“It will be a mixture of Thar coal and imported coal. By this, Pakistan will save annually $1 billion in foreign exchange reserved which is spent on importing fuel,” he said while addressing the newly appointed chairmen and board members of the power distribution companies (Discos).

“We are also in talks with China on the investment on the improvising the boilers. These talks are encouraging,” he said.

Last month, Energy Minister Awais Leghari told Reuters that the country would ask Chinese power plants operating in the country to shift to using coal from Sindh’s Thar region rather than imported coal.

Such a transition would benefit the Chinese-owned plants in Pakistan by reducing pressure on Islamabad’s foreign exchange reserves, he said, making it easier to repatriate dividends and offering a better return in dollar terms.

The transition could save Pakistan more than Rs200 billion a year in imports, translating to a decrease of as much as Rs2.5 per unit in the price of electricity, Leghari said.

In April a subsidiary of conglomerate Engro agreed to sell all of its thermal assets, including Pakistan’s leading coal producer, Sindh Engro Coal Mining to Pakistan’s Liberty Power. Liberty said the decision stemmed from Pakistan’s foreign exchange crunch and its indigenous coal reserve potential.

In June, the Cabinet Committee on State-Owned Enterprises approved the reconstitution of the boards of nine DISCOs. The decision was taken to improve the corporate governance of power distribution companies.

“Our sole focus is to reduce power prices to provide relief to domestic consumers, agriculture, industry, exports and business sectors,” PM Shehbaz said. “This is inevitable to steer the economy of prevailing issues. The competitiveness of exports is linked with the cheap electricity.”

While calling the low-cost electricity and efficient power transmission system the major factors for a stable economy, the premier said that he and the Special Investment Facilitation Council were focused on achieving the said targets.

He told the participants that the government would publicly recognise the Discos members and heads who would put in their maximum efforts to bring improvements, but “those failing to do so would neither be spared nor would remain part of the team.”

The prime minister said the government had appointed “highly competent and experienced people” in Discos purely on merit by doing away with the political appointees through a “lengthy process”.

According to the premier, the newly appointed chairmen and members had great challenges ahead which necessitated working hard day and night to purge the Discos of mismanagement and corruption.

He claimed the power theft had swelled to around annual Rs500 billion mainly due to connivance with the Discos staffers who were also the reason behind destroying the institutions.

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“This is the greatest challenge for you. The government has made deliberations as to how the system should be improved. You will have to show your best,” PM Shehbaz said.

He said that the circular debt had touched Rs2300 billion – almost one-third of the country’s total receipts of Rs9 trillion last year. “Can a country be run with such a huge burden?” he added.

While highlighting the issues of line losses and weak transmission systems, he instructed the immediate launch of smart metering in some of the Discos.