The Punjab government announced that relief for power consumers will be funded through the profits accumulated by two state-owned thermal power companies, Quaid-e-Azam Thermal Power Private Limited and Punjab Thermal Power Private Limited.
According to a news report, the provincial cabinet decided to cut the tariffs of these two plants by 30-40% to ease the burden of electricity bills, a move akin to the federal government’s recent renegotiations with independent power producers (IPPs) to lower national tariffs.
The government stated that the two power companies would forgo their profits, which range from Rs 12 to Rs 13 billion, and would also refrain from withdrawing about Rs 12 billion in savings. These funds will instead be redirected to provide public relief, translating into a 30-40% reduction in electricity rates. The savings generated from these measures will be conveyed to the federal government to assist in its efforts to reduce national power tariffs.
Power sector experts have welcomed the step, noting that there is still more potential for savings. Suggestions include negotiating with local banks that financed the power projects to reduce the mark-up rate and shifting away from payments in foreign currencies, which could further create space for tariff reductions.Â
Earlier this year, the government reported securing Rs 1.571 trillion in savings from renegotiating agreements with 27 IPPs. These savings were achieved through a combination of contract terminations and tariff revisions, including Rs 411 billion from terminating contracts with five IPPs and Rs 238 billion from revising tariffs with eight bagasse-based IPPs.
