Federal Minister for Energy, Awais Leghari, announced that the government is working on providing permanent relief to consumers facing high electricity bills. Speaking on a TV program, Leghari said that the issue of expensive electricity, largely caused by unfavorable agreements with Independent Power Producers (IPPs), is being addressed, and the public can expect good news soon.
Leghari explained that a detailed review of IPP agreements has been completed, but any changes to the contracts cannot be made unilaterally. Doing so could lead to a situation similar to the Reko Diq dispute. He added that the previous government, led by PTI, failed to take advantage of opportunities to renegotiate with the IPPs in 2019.
The minister shared that the current government has taken the investigation into IPP contracts further, continuing the work started by a committee set up in 2019 under former minister Muhammad Ali. This committee was tasked with reviewing the power sector and renegotiating power purchase agreements with IPPs.
Leghari also highlighted that the government is actively working on several measures to reduce electricity tariffs, including negotiations with power plants. He acknowledged that Pakistan’s energy crisis is largely due to poorly planned agreements with IPPs made by various governments over the years. These contracts have resulted in some of the highest electricity bills in the world, with taxes and capacity charges making up 70% of the total bill.
In the past 15 years, the country has lost billions due to the growing circular debt in the power sector. Since July 2018, the cost of electricity has risen by nearly 96%, and the duration of these IPP contracts will continue until around 2050.