In a landmark decision, the government has begun the termination of contracts with five Independent Power Producers (IPPs), a move anticipated to save consumers Rs60 billion annually and contribute to a reduction in electricity tariffs. The announcement was made during a federal cabinet meeting chaired by Prime Minister Shehbaz Sharif, who emphasized that this initiative is part of a broader strategy to relieve the financial burden on citizens and bolster the national economy.
The first phase of this initiative includes the termination of agreements with HUBCO, Lalpir, Saba Power, Rousch Power, and Atlas Power. According to government officials, these changes are expected to save the national treasury a total of Rs411 billion without incurring additional payments to the IPPs for outstanding dues. Prime Minister Sharif praised the IPPs for their voluntary decision to end their contracts in the national interest, noting that this sets a positive precedent for future reforms in the energy sector.
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During the meeting, the Prime Minister expressed optimism about the country’s economic recovery, stating, “With the grace of Almighty Allah, the national economy is stabilizing swiftly.” He reiterated the government’s commitment to delivering relief to the public through dedicated efforts. Additionally, he acknowledged the significant contributions of overseas Pakistanis, whose remittances reached a record $8.8 billion last quarter, reflecting their trust in the government’s policies.
Rousch Power, established under a Build-Operate-Transfer agreement, will be handed over to the government for privatization through the Privatization Commission, while the other four IPPs will maintain ownership without any further payments following the termination of their agreements. The Prime Minister highlighted ongoing plans for further reforms in the power sector, with additional reviews of IPP contracts aimed at gradually lowering electricity tariffs.
The government believes that this initiative marks the beginning of substantial reforms intended to provide economic relief to the public while ensuring the sustainability of Pakistan’s energy sector. Prime Minister Sharif concluded by reaffirming his dedication to fulfilling promises made to citizens and addressing their concerns regarding rising inflation, which has significantly decreased from over 30% to 6.9%.
