- Prime Minister Shehbaz is holding a federal cabinet meeting today.
- The government approves the proposal to reduce capacity costs.
- The Prime Minister considers the revised agreements a major achievement.
The federal cabinet on Tuesday approved revised agreements with 14 independent power producers (IPPs), which are expected to save around Rs 1.4 trillion over their applicable duration, with annual savings of Rs 137 billion benefiting consumers of electricity, burdened by massive electricity tariffs.
After holding discussions with the 14 IPPs under the revised agreements, the cabinet gave a green light to the Power Division’s recommendation of cuts of Rs802 billion in terms of profit and cost of the said IPPs.
An amount of Rs35 billion of excess profits from previous years would also be deducted from these PPIs under the revised agreements.
The cabinet meeting, chaired by Prime Minister Shehbaz Sharif at the Prime Minister House, was informed that 10 of these IPPs were operating under the 2002 energy policy, while four were established under the policy of 1994. In addition, an agreement with a police RRI of 1994 was terminated.
He appreciated the performance of the Minister of Energy, Advisor, Secretary and members of the task force in finalizing the revised agreements with the IPPs, stressing that this achievement would reduce circular debt, lower tariffs and lead to significant national economies.
The Power Division said it has so far reviewed contracts with 28 IPPs.
Furthermore, the cabinet, on the recommendation of the committee formed under the government right-sizing initiative, approved the merger of the Department of Narcotics Control into the Interior Ministry Division.
After the merger, the Narcotics Control Division will function as a branch under the Ministry of Interior, while the Anti-Narcotics Force will function as an attached department.
This integration is expected to save Rs 183.25 million per year in administrative and operational expenses.
Similarly, the cabinet also approved the merger of the aviation division with the defense ministry, which will save Rs 145 million per year in terms of salaries, office expenses and other administrative costs.
The cabinet was informed that civil aviation, which previously fell under the Ministry of Defense until 2013, would be merged again into the Ministry of Defense in line with the government’s austerity policy. This step should improve airspace management.