Prime Minister Shehbaz Sharif announced on Thursday that the government will terminate contracts with five Independent Power Producers (IPPs) in the first phase. This move aims to provide financial relief to the public, especially in light of the recent rise in electricity bills across Pakistan.
The prime minister shared that ending these contracts will save consumers Rs60 billion annually and the national exchequer Rs411 billion. The IPPs involved, including Hubco, Lalpir, Saba Power, Rousch Power, and Atlas Power, agreed to the termination in the “nation’s interest.”
PM Shehbaz also noted that the “take and pay” system for these IPPs has ended, which means capacity charges will no longer be included in electricity bills. He emphasized that this decision is part of a larger effort to reduce tariffs by revising agreements with other IPPs.
During a cabinet meeting, the prime minister praised the IPPs for their cooperation, likening their action to “the first drop of rain” for public relief. He also mentioned that inflation has significantly dropped, and record remittances of $8.8 billion from overseas Pakistanis reflect confidence in government policies.
The agreements with these five IPPs will soon be finalized, and the termination of the contracts marks a significant step in reforming Pakistan’s power sector.
Meanwhile, Hub Power Company Ltd (Hubco) has also confirmed the early termination of its contract with the government, initially set to expire in 2027, in the “greater national interest.”
The government has been working to renegotiate power deals to reduce electricity tariffs, addressing concerns over high energy costs affecting households and businesses.