As the country grapples with crippling electricity bills attributed to ‘unfavorable’ agreements with independent power producers (IPPs), Federal Minister for Energy (Power Division) Awais Leghari announced on Wednesday that ‘permanent relief’ for consumers is on the horizon.
In an interview’ ‘Aaj Shahzeb Khanzada Kay Sath,’ Leghari revealed that a comprehensive review of the IPP agreements has been completed and that the nation can expect ‘good news’ soon regarding these issues.
The Pakistan Muslim League-Nawaz (PML-N) government has faced widespread protests over extended load-shedding and soaring electricity bills throughout the summer. Criticism has intensified over the IPP agreements, with demands to reassess these deals, as the government acknowledges that Pakistan has some of the highest electricity tariffs in the region.
However, Leghari noted that unilateral changes to IPP contracts are unlikely, warning earlier this week that such actions could lead to a ‘Reko Diq-like situation.’
When asked about the 2019 renegotiations with IPPs, Leghari stated that the Imran Khan-led cabinet had provided relief through an arbitration process, but criticized the PTI government for missing an opportunity to secure further concessions.
Leghari also provided an update on the ongoing investigation into the IPP issue, stating that the current government is advancing the probe report prepared by former minister Muhammad Ali.
In 2019, Muhammad Ali chaired a committee that audited Pakistan’s power sector, resulting in the renegotiation of power purchase agreements (PPAs) between the government and IPPs. The power minister highlighted that various measures are being considered to reduce electricity tariffs, with negotiations ongoing with all power plants in the country.
Sector analysts attribute Pakistan’s power crisis primarily to the poorly negotiated PPAs with IPPs, which have resulted in some of the highest electricity bills globally. Taxes and capacity fees account for 70% of consumers’ bills, according to analysts.
Over the past 15 years, the country has incurred losses of nearly Rs5,082 billion due to unchecked circular debt, leading to an annual loss of Rs370 billion. Since July 2018, the power purchase price has surged by 95.82%, with IPP contracts extending until around 2050.
