Pakistan will drastically cut the cost of power.

In response to mounting consumer worries over excessive energy costs, the Ministry of Energy has promised respite by announcing a considerable cut in electricity prices by June.

Renegotiating contracts with independent power producers (IPPs) was one of the important energy crisis solutions considered at a Senate Standing Committee on Energy meeting led by Senator Mohsin Aziz.

The power secretary informed the committee that consumers could benefit from relief amounting to Rs802 billion if contracts with 15 IPPs are terminated. Furthermore, the shutdown of five IPPs is saving Rs411 billion, and a total of Rs1,040 billion might be saved by evaluating contracts and changing the tariff rate of eight IPPs from dollars to rupees.

For 15 IPPs that presently use the “take-and-pay” approach, the government also intends to remove the capacity payment requirement.

Nine of the eleven distribution firms (DISCOs) are to be privatized as part of a massive revamp of the power industry in an effort to increase efficiency and lower losses. The process of privatization will take place in stages:

First Phase: GEPCO, FESCO, and IESCO
Phase 2: MEPCO, HAZECO, and LESCO
Phase Three: PESCO, HESCO, and SEPCCO
DISCOs with high losses, such as TESCO and QESCO, will not be privatised.

During the session, committee member Shibli Faraz remarked that changes were being made in the power sector around the world. He questioned the energy minister’s claim of offering “cheap electricity in the region,” asking whether it was a genuine effort or a political statement.

With circular debt and losses in the hundreds of billions, the PTI leader sought clarification on the feasibility of making electricity cheaper in the current economic scenario. “How much scope do you have to make electricity cheaper?” he asked.

The government is under pressure to modernize its power sector in line with global trends. Shibli Faraz criticised the continued reliance on outdated models, emphasizing the need for innovation to reduce costs and improve efficiency.