Rs10 per unit cut in power tariff expected as govt approves revised deals with 14 IPPs

The federal cabinet, chaired by Prime Minister Shehbaz Sharif, approved revised agreements with 14 Independent Power Producers (IPPs), a move expected to reduce electricity prices by Rs10-11 per unit. 

The renegotiated contracts are set to save Rs802 billion by reducing the profits and costs of the IPPs, with an additional Rs35 billion to be deducted from excess profits earned in previous years.

The revised agreements cover 10 IPPs operating under the 2002 power policy and four under the 1994 policy. One of the IPPs from the 1994 policy has had its contract terminated. 

The new arrangements are projected to yield a total saving of Rs1.4 trillion over the contract period, translating to Rs137 billion in annual savings for consumers.

Prime Minister Shehbaz Sharif hailed the agreements as a “significant achievement” that will not only reduce the national circular debt but also bring much-needed relief to electricity consumers.

In addition to the IPP agreements, the cabinet approved the merger of the Ministry of Narcotics Control with the Ministry of Interior, aiming to streamline operations and cut administrative costs. The Anti-Narcotics Division will now function as a wing within the Interior Ministry, while the Anti-Narcotics Force (ANF) will become an attached department. This restructuring is expected to save Rs183.25 million annually.

The cabinet also greenlit the merger of the Aviation Division with the Defense Division, aligning with fiscal austerity measures. Previously managed under the Ministry of Defense until 2013, this merger aims to enhance airspace management and is projected to save Rs145 million annually.

Further, the cabinet approved an amendment to the Public Procurement Rules, 2004, introducing Section 45-A, which allows procuring agencies to delegate their procurement processes to other agencies.

The cabinet also endorsed the National Commission for Minorities Act 2024 for submission to Parliament, following a Ministry of Human Rights recommendation. 

Additionally, Dr. Muhammad Bashir’s contract as a member of the Technical Environment Tribunal, Islamabad, was extended for two years on the recommendation of the Law and Justice Ministry.