ISLAMABAD: Federal Minister for Power Awais Ahmad Khan Leghari informed a parliamentary panel on Thursday that the government was actively working to reduce the electricity tariff by Rs10 to Rs12 per unit.
During a briefing to the National Assembly’s Standing Committee on Power, the minister explained that eight to nine factors were currently under review to lower power costs, including revising deals with independent power producers (IPPs) and government-owned generators.
Muhammad Idrees chaired the meeting of the standing committee. Leghari also informed the panel that discussions with the International Monetary Fund (IMF) concerning captive power plants were nearing conclusion, expressing optimism that an agreement would be finalised by the end of the month. Electricity tariffs for domestic consumers had already been reduced by Rs4 per unit. Additionally, by revising the Power Purchase Agreements (PPAs) with the IPPs, the government managed to secure savings of Rs1.1 trillion. The minister revealed that contracts with both state-owned and private power generation plants would be revisited as part of the broader effort to manage energy costs.
Currently, the government is reviewing the operations of eight bagasse-based power plants and plans to examine the PPAs of an additional 16 IPPs. The review would focus on assessing the return on equity of state-owned generation plants. Leghari said that K-Electric had sought a huge amount on account of the Multi-Year Tariff, and said the government rejected the proposal to raise electricity rates by Rs10.5 per unit. He said K-Electric wanted to earn a profit of Rs500 billion within the next five to seven years which was unfair. He said the Karachi electricity company’s multi-year tariff request was under review, with the regulator prioritising public interest in its decision. “We are committed to safeguarding the public interest and will not allow unnecessary burden on consumers,” Leghari stressed. The lawmakers voiced concern over hefty capacity payments and fixed charges imposed on electricity consumers. Officials from the National Electric Power Regulatory Authority (Nepra) revealed that capacity payments currently amount to a staggering Rs2 trillion annually, representing 75 percent of total electricity costs.
Committee member Malik Anwar Taj said that the consumers pay up to Rs2.5 trillion in capacity payments. “So, if capacity payments must be made, then take electricity from IPPs and provide it free to the public,” he added. The lawmakers also criticised the impact of load-shedding on development projects.
Power Minister Awais Ahmad Leghari said that they held four meetings with the Khyber Pakhtunkhwa chief minister, adding the federal government also struggled to curb electricity theft in high-loss areas but faced resistance. “We opened electricity to the most theft-prone feeders on the condition that locals would remove illegal connections (kundas). Unfortunately, the administration didn’t cooperate, and our [distribution] company suffered an additional Rs6 billion loss,” he said. Leghari acknowledged regional disparities but denied discrimination against Khyber Pakhtunkhwa. He described the provincial government’s performance in curbing electricity theft as inadequate. “Despite multiple meetings with KP’s chief minister, results on addressing kunda culture were unsatisfactory,” he said. The federal minister further said the boards of eight power distribution companies (Discos) had been replaced as part of ongoing reforms, resulting in significant savings over the past five months. He stressed the importance of an in-camera discussion on sensitive issues, particularly regarding the boards of Sukkur Electric Power Company (Sepco) and Hyderabad Electric Supply Company (Hesco). “I will only discuss board changes in an in-camera session,” Leghari said, adding, “Let’s hold this meeting in-camera, and I will provide a detailed briefing.” MNA Muhammad Idrees, chairman of the standing committee, however, dismissed the proposal, saying, “An in-camera session cannot be held at this moment. There is a proper procedure for everything.”
Later, while talking to the media, Leghari highlighted that renegotiations with IPPs have already saved Rs1.1 trillion and reduced electricity tariff. “We are now turning to agreements with government-owned power plants. Once reviewed, these deals will bring significant savings for the public,” he said. Furthermore, he announced plans to present revised agreements with 15 more IPPs to the federal cabinet, aiming for additional cost reductions. K-Electric’s multi-year tariff request is under review, with the regulator prioritising public interest in its decision.
Later, during a conference on hydropower, Awais Leghari emphasised the government’s commitment to energy sector reforms, revealing a substantial reduction in Discos losses and outlining plans to ease electricity tariffs. However, he warned that new hydropower projects totalling 17,000 MWs could be scrapped if tariff reductions were not implemented.
The minister highlighted that losses of Discos dropped from Rs223 billion in July-November 2023 to Rs170 billion during the same period in 2024. Leghari announced that efforts were underway to review the taxes embedded in electricity bills. However, he admitted that the uniform tariff system remained a major challenge. Additionally, he unveiled plans to launch the electricity market in March 2025. In this market, the price will be determined by market dynamics, with the government serving as facilitator. On solar energy, Leghari said demand for solar solutions was rising due to high electricity costs. An estimated 10,000 to 12,000 MW are expected to be added to the system through net metering. He noted the government’s focus on promoting off-grid solar solutions to further enhance power generation. Discussing infrastructure improvements, he detailed steps being taken to revamp the National Transmission and Dispatch Company and modernise the transmission system.