Rs411b saved from IPP deals: minister

As the year draws to a close, Federal Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari claimed on Saturday that electricity rates had come down up to Rs11 per unit during the last nine months.

The minister shared the government's key achievements, ongoing initiatives in the power sector and reforms in the electricity distribution.

"The government is moving towards privatisation and concession models, preceded by the hiring of independent Boards of Directors for distribution companies," he said, while addressing a press conference.

Regarding independent power producers (IPPs), the minister revealed that agreements with five IPPs had been terminated in the first phase, achieving national savings of Rs411 billion and annual savings of Rs70 billion.

"In the second phase, agreements with eight bagasse-based IPPs have been settled, resulting in annual savings of Rs8.826 billion and national savings of Rs238.22 billion. Negotiations with 16 other IPPs are underway and are expected to save Rs481 billion," he added.

He said that the power sector has shown marked improvement in electricity prices and the average price of electricity has decreased to Rs44.04 per unit from Rs48.70 per unit in June 2024, marking a reduction of Rs4.66.

He further elaborated on the decline in industrial electricity prices, which dropped to Rs47.17 per unit from Rs58.50 per unit in June 2024, reflecting a reduction of Rs11.33 per unit.

Leghari explained that the government was shifting circular debt costs from electricity bills to the national debt to alleviate the burden on consumers.

Through innovative policies, substantial investments, and bold reforms, he said, significant progress has been made toward ensuring energy sustainability, reducing electricity costs, and driving economic growth.

Presenting an overview of reforms undertaken in the last nine months, the minister stated, "We have eliminated Rs150 billion in cross-subsidies from the industrial sector, a step that has boosted industrial growth and job creation in Pakistan".

He also revealed ongoing upgrades in the transmission sector, including the division of the National Transmission and Dispatch Company (NTDC) into three entities: the National Grid Company of Pakistan for efficient and reliable transmission, the Energy Infrastructure Development and Management Company for project management and the Independent System and Market Operator to establish a competitive and transparent electricity market.

He highlighted the solarisation of agricultural tube wells in Balochistan. "We are solarising 27,000 tube wells at a cost of Rs55 billion, with a 70 per cent federal government contribution."