Prime Minister orders reduction in electricity tariffs, emphasizes priority given to low-cost energy projects

• The Prime Minister orders the shift of power generation capacity to solar power.
• It calls for the immediate closure of inefficient power plants.
• It orders action against officials who willfully obstruct reforms.

ISLAMABAD: As the incumbent government makes efforts to address the multifaceted challenges in the power sector, Prime Minister Shehbaz Sharif on Friday directed the relevant authorities to further reduce electricity tariffs and expedite the process of implementing the action plan for future projects electricity production.

The prime minister issued the directives while presiding over a meeting to assess and discuss the country’s future electricity and power plans. The meeting was attended by Federal Ministers Ahad Khan Cheema, Awais Leghari, Dr Musadik Malik, Minister of State Ali Pervaiz Malik and other officials.

During the meeting, he was informed about the progress of the hydroelectric power projects that are underway across the country.

Stressing the need to prioritize low-cost power projects based on local resources, Chief Minister Shehbaz said such projects generate environment-friendly and affordable electricity.

He also added that the current power generation capacity should also be shifted to solar power.

Globally, electricity is generated from environment-friendly, low-cost solar energy, he noted, adding that Pakistan was fortunate in this regard as the country had huge potential for solar energy.

The prime minister was also briefed on the progress of phasing out inefficient power plants that consume more fuel but produce less electricity.

He ordered the immediate closure of such obsolete power plants adding that the closure of these plants will not only save valuable foreign exchange but also reduce the cost of electricity to the consumers.

The Prime Minister also directed that immediate action be taken against all officials who are deliberately obstructing power sector reforms. He also ordered that reforms to the electricity transmission system be expedited.

The electricity transmission system should be upgraded according to international standards, the prime minister further stressed.

He further directed the rapid implementation of a system based on modern technology for the selection and transmission of low-cost electricity.

The prime minister issued instructions to complete all the measures for the electricity sector reform within the stipulated time frame.

The meeting came days after the federal cabinet approved “settlement agreements” with eight bagasse-fired independent power producers (IPPs) – a move the government says will benefit the national exchequer by Rs238 billion.

These bagasse based power plants included DW Unit I, Unit II, RYK Mills, Chiniot Power, Hamza Sugar, Al-Moez Industries, Thal Industries and Chinar Industries.

Two months earlier, the prime minister announced the early termination of power purchase agreements (PPAs) with the five older IPPs, with annual savings of Rs 60 billion or about Rs 411 billion over the remaining term of their contracts.

The federal government has been under huge pressure to review its PPAs with power plants following a nationwide outcry as the addition of capacity payment charges inflated power bills beyond the affordability of the inflation-burdened masses.