Govt scraps 8,000MW high-cost power procurement, targets $17bn savings, says energy minister 

The government has scrapped plans to procure around 8,000 megawatts of high-cost electricity, a move expected to save nearly $17 billion, Federal Minister for Power Sardar Awais Ahmed Khan Leghari said on Sunday, while rejecting what he described as inaccurate assessments of circular debt by the power sector regulator.

Addressing a press conference, the power minister said the decision was taken on merit and formed part of broader power-sector reforms aimed at lowering costs and improving efficiency, adding that financial losses incurred by distribution companies were being absorbed by the federal government rather than passed on to electricity consumers.

Leghari said sector-wide reforms had improved recoveries and reduced losses and circular debt. According to figures shared by the minister, overall losses declined from Rs586 billion to Rs393 billion, while recoveries improved by Rs183 billion. Circular debt, he said, fell by Rs780 billion over the past year.

He said national electricity tariffs had been reduced by around 20% over the last two years and expressed confidence that prices would align with international benchmarks within the next 18 months. He attributed the progress to reforms undertaken under the leadership of Shehbaz Sharif.

Leghari also criticised a recent report issued by the National Electric Power Regulatory Authority, calling its findings on circular debt and sector performance misleading. He said the report relied on incomplete data and failed to reflect government achievements.

Rejecting Nepra’s assessment, the minister said circular debt had declined from Rs2.4 trillion to Rs1.6 trillion, marking the first sustained reduction. He said the decrease included Rs193 billion from lower distribution company losses, Rs260 billion from renegotiated contracts with independent power producers, and around Rs300 billion from improved macroeconomic conditions. A six-year plan to eliminate circular debt entirely was under implementation, he added.

Leghari said distribution company recoveries improved from 92.4% to 96.6% in FY2025, reducing the recovery gap from Rs315 billion to Rs132 billion. During the first half of FY2026, recoveries increased by a further Rs43 billion year-on-year. He said mechanisms had also been introduced to recover dues from government departments, with 25% adjustments now made through the federal adjuster against verified bills.

On consumer pricing, the minister said the national average electricity rate declined from Rs53.04 per unit in March 2024 to Rs42.27 per unit by December 2025. He acknowledged a drop in electricity demand but attributed it to broader economic factors and increased reliance on alternative energy sources.

Leghari said further measures were underway to reduce tariffs, including three-year incentive packages, tariff renegotiations and debt refinancing. He also defended the continued application of the debt service surcharge, saying it was now being used to repay both interest and principal and would be removed once liabilities were cleared within five to six years.

The minister rejected Nepra’s position on K-Electric, saying the utility had contributed significantly to circular debt through delayed payments. He said K-Electric’s non-payments added Rs640 billion to circular debt by June 2023, with outstanding liabilities exceeding Rs300 billion as of November 2025, despite receiving over Rs600 billion in subsidies over the past five years.

Leghari also faulted Nepra for approving generation plans without comprehensive studies, which he said resulted in an expensive power mix. He said the current government had reversed that approach by cancelling costly future projects.

On load management and digitisation, the minister said transformer-level controls were being introduced and 1.6 million smart meters had already been installed, with around 90% communication availability. Consumers, he added, could now submit self-meter readings through the “Apna Meter, Apni Reading” mobile application.

He said Rs40 billion had been refunded to consumers through billing adjustments and stressed that inefficiencies within distribution companies were being covered by the government rather than transferred to consumers or added to circular debt.