Govt saves Rs1.3 trillion from renegotiated agreements with IPPs

The government has secured lifetime savings of Rs1.3 trillion through renegotiated agreements with Independent Power Producers (IPPs), according to the Power Division. 

The revised contracts are also expected to result in reduced capacity payments and lower electricity tariffs, benefiting consumers who have long been burdened with excessive payments to IPPs, some of which received payments without producing electricity due to past flawed agreements.

As part of the renegotiation process, the government has succeeded in reducing the capacity payments, leading to a decrease of Rs7 per unit in electricity tariffs. The Power Division is now focused on ensuring that these savings are passed on to consumers, a significant move aimed at easing the financial strain on the public.

During a cabinet meeting, Power Minister Sardar Awais Ahmad Khan Leghari presented a review of the government’s reforms in the power sector, including tariff reductions and renegotiations with 14 IPPs and eight bagasse-based IPPs, which have collectively generated lifetime savings of Rs1,333 billion.

The government has also set plans for future reforms, including the conversion of imported coal-based power plants to Thar coal, the development of an Integrated System Plan, and the rationalization of net metering, all aimed at further improving efficiency and reducing the country’s energy costs.