Govt hopes Rs10-12 per unit cut in electricity prices amid ‘ongoing talks with IMF’

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ISLAMABAD: The federal government has hoped to reduce the electricity prices by Rs 10-12 per unit during the ongoing negotiations with the International Monetary Fund (IMF) on captive power plants.

Federal Minister for Energy (Power Division) Owais Laghari while speaking at the meeting of the Standing Committee on Energy of the National Assembly on Thursday said that the issue of captive power plants is close to being resolved.

The minister disclosed plans to review eight bagasse-based power plants and an additional 16 plants.

He noted that after these evaluations, the return on equity of government-owned plants will be reviewed. “By the end of this month, the issue of captive power plants will be resolved,” he said, adding, “Power prices for domestic consumers have already been reduced by Rs 4 per unit.”

The power minister expressed his desire to reduce overall electricity tariffs by Rs 50 but also cited the complexities of achieving this target.

Allaying concerns about K-Electric, Laghari criticized the power utility’s profit demand of Rs 500 billion over the next 5-7 years, terming it unreasonable.

He stressed that such profit margins would unfairly affect consumers in Khyber Pakhtunkhwa and other areas.

This statement came amid repeated demands by the Prime Minister Shehbaz Sharif-led government for drastic reduction in electricity prices.

Earlier this month, sources told Geo News that tariff revisions for eight bagasse-based power plants would save Rs 238 billion, which equates to an annual savings of Rs 8.83 billion.

Additionally, the cancellation or modification of contracts with another 16 IPPs will result in an additional benefit of Rs 481 billion. These savings will be passed on to consumers in the form of reduced electricity prices.

Besides finalizing termination of contracts with five IPPs last year, the government last month also completed talks with RFO-based plants under “take and pay” terms.

It was earlier reported that Islamabad aims to reduce electricity rates by Rs 12 per unit by March 2025 through contracts with IPPs and renewable energy sources such as wind and solar power plants.

‘Competitive Electricity Market’

Meanwhile, Laghari, speaking at the closing ceremony of the 4th International Hydropower Conference, said that a competitive electricity market will be launched in March, where market forces will determine electricity rates, and the government will only act as a facilitator. will play a role.

The minister said that the demand for solar solutions is increasing due to the high cost of electricity. “An additional 10,000 to 12,000 MW of electricity is likely to be added to the system under net metering in the country.”

He said that they had introduced net metering in the country in 2017. However, he said net metering was enjoyed by the elite class. “High cost of electricity has led to a solar revolution in the country.”

He further said that the government has challenged the status quo in the energy sector in the last 9 months. He said that we are also evaluating whether big projects like Bhasha Dam and nuclear power are feasible for us or not.

Emphasizing the need for necessary decisions for sustainable development in the energy sector, the minister said that the government was taking all possible measures for the convenience of the people.

The minister noted that the government has saved Rs 1.1 trillion through discussions with Independent Power Producers (IPPs).

He said that people can no longer afford to pay electricity bills and the government is going to restructure the entire power sector. “We are restructuring the National Transmission and Dispatch Company (NTDC),” he added.

Explaining the government’s reforms in the power sector, he said that the losses of the distribution companies have come down significantly. He said that from July to November 2023 these losses were 223 billion rupees which reduced to 170 billion rupees during the same period in 2024.

He said that out of total 10 Boards of Directors (BoDs) of Power Distribution Companies (DISCOs), 8 have been completely replaced and not a single one has been added on political grounds.

He said that the government is reviewing the various taxes included in the electricity bills to provide maximum relief to the consumers. Describing uniform tariff as a major challenge for the entire country, he said it was unfair to shift the burden of one company to another.