The Pakistani federal cabinet has approved revised agreements with 14 independent power producers (IPPs), potentially leading to an Rs11 reduction in electricity prices. The renegotiated contracts are expected to save the government a substantial 1.4 trillion Rupees.
The decision, announced following a cabinet meeting chaired by Prime Minister Shehbaz Sharif, comes after the Power Division recommended revisions to the agreements. These revisions, reached through negotiations with the 14 IPPs, will reduce their profits and costs by Rs802 billion.
According to a cabinet statement, an additional Rs35 billion will be recovered from the IPPs in the form of past excess profits. Ten of these IPPs operate under the 2002 power policy, four under the 1994 policy, and one 1994-policy IPP agreement has been terminated.
The government anticipates cumulative savings of Rs1.4 trillion over the lifetime of the revised agreements, with annual savings of Rs137 billion. These savings are expected to benefit consumers through lower electricity bills.
Prime Minister Sharif hailed the revised agreements as a major success, stating they will not only save the national treasury but also eliminate circular debt and reduce electricity prices.
He commended the performance of the Power Minister, Power Advisor, Power Secretary, and members of the task force responsible for the successful renegotiations with the IPPs.
