Government Announced to Terminate Power Purchase Agreements with 5 IPPs

Pakistani government has decided to terminate electricity purchase agreements with five Independent Power Producers (IPPs). Prime Minister Shahbaz Sharif, speaking at a recent federal cabinet meeting, reiterated the administration’s commitment to addressing the longstanding issues surrounding these agreements.

During his address, the Prime Minister mentioned that efforts have been ongoing for the past seven months, under the vigilant oversight of former Prime Minister Nawaz Sharif. He acknowledged the dedication of all relevant ministries, emphasizing that finding a solution to the IPP dilemma is no easy task.

A task force led by Owais Leghari has been established to oversee the process, with the initial phase focusing on the termination of contracts with the five identified IPPs. The Prime Minister commended these companies for prioritizing national interests, stating that their cooperation will yield substantial benefits for electricity consumers and the national treasury.

The expected outcomes include a significant annual saving of approximately 60 billion rupees for consumers and 411 billion rupees for the state, as these funds will no longer be required for payment.

Prime Minister Sharif expressed optimism that this initiative will lead to lower electricity prices, stating, “This is just the first drop of rain; more will follow.” He also highlighted the importance of gradually reviewing contracts with other IPPs to further reduce electricity tariffs.

Additionally, the Prime Minister pointed out the positive trend in the economy, marked by an increase in remittances from overseas Pakistanis. He acknowledged the hardships faced by the public and praised their resilience during these challenging times.

To provide immediate relief, the government has allocated 50 billion rupees for households consuming 200 units of electricity, alongside additional support for Punjab residents.

Addressing the recent decline in inflation rates from 32% to 6.7%, the Prime Minister affirmed the government’s determination to continue working towards affordable electricity, despite challenges such as power theft and inefficiencies in transmission.

In closing, he emphasized the collaborative efforts with international partners, particularly Saudi Arabia and China, in navigating the complexities of IPP agreements and reaffirmed the government’s commitment to resolving these critical issues for the betterment of the nation.