In a significant move aimed at reducing electricity prices and curbing national debt, the federal cabinet, led by Prime Minister Shehbaz Sharif, approved revised agreements with 14 Independent Power Producers (IPPs) on Tuesday. These changes are projected to decrease electricity prices by Rs10-11 per unit, benefiting consumers nationwide.
The cabinet’s approval followed a proposal by the Power Division to review existing contracts with the IPPs. The revised agreements are expected to reduce profits and costs for these power producers by Rs802 billion. Additionally, Rs35 billion will be deducted from the extra profits these companies have accumulated in recent years. Among the affected IPPs, 10 operate under the 2002 power policy, while 4 are part of the 1994 policy. Notably, one IPP under the 1994 policy has had its contract terminated.
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These renegotiations are projected to save a total of Rs1.4 trillion over the life of the contracts, translating into Rs137 billion in annual savings, which will directly benefit consumers. Prime Minister Sharif praised the revised deals, emphasizing their role in reducing circular debt and making electricity more affordable.
The cabinet also approved several administrative changes, including the merger of the Ministry of Narcotics Control with the Ministry of Interior as part of a broader right-sizing initiative. This merger is expected to save Rs183.25 million annually by reducing administrative costs. Similarly, the Aviation Division will merge with the Defense Division, aiming to enhance airspace management and save Rs145 million annually.
Other key decisions included the approval of the National Commission for Minorities Act 2024 and an extension of Dr. Muhammad Bashir’s contract as a member of the Technical Environment Tribunal for two more years.
These reforms highlight the government’s commitment to fiscal austerity and improving public sector efficiency, while also bringing relief to consumers through lower electricity prices.