- GOT BOSS for the competitive energy market, the profitable tender system.
- RS7.41 / The drop in unit prices covers taxes, benefits industrial and national users.
- Reforms include privatization, regulatory monitoring, debt reduction plans.
The government has revealed an in -depth strategy aimed at combating circular debt of 2.4 billions of rupees and reforming the energy sector, which includes the privatization of crucial energy distribution companies and greater participation in the private sector in electricity supply.
Federal Minister of Energy Awais Ahmed Khan Leghari, while scoring the media on Friday, stressed that the government tried to reduce electricity costs and improve the efficiency of the energy sector thanks to these structural reforms.
“We aim to create a competitive market where power supply is based on the least expensive principles,” said Leghari, stressing that future electricity projects would be awarded by a profitable offer.
The reduction recently announced by the government of RS7,41 electricity costs per unit includes taxes, and without taxes, the actual reduction amounts to 5.98 rupees per unit. Interestingly, it includes adjustments thanks to quarterly tariff adjustments (QTA), fuel cost adjustments (FCAS) and subsidies, mainly derived from negotiations with three dozen PPIs, said the minister. The reduction in the industrial sector is RS7.69 per unit (including taxes).
He called for changes to the national law on the regulatory authorities of electrical energy (NEPRA) to strengthen regulatory monitoring and alluded to efforts aimed at converting imported coal -fired power plants, including those under CPEC, in local coal to reduce the import bill and lower electricity production costs.
He said, “We work there and finalize a banning document by June 2025. The government is also in talks with Chinese companies for the reproach of the debt,” he added.
This decision aims to alleviate the financial burden of consumers while approaching the increasing circular debt of 2.4 billions of rupees in the Pakistan sector. In addition, national users consuming up to 200 units per month will benefit from a reduction of almost 50% of their electricity bills in the context of new measures designed to help low -income households.
Leghari said that negotiations with 36 independent electricity producers (PPI) have concluded, projecting a total economy of RS3,696 Billion during the lifespan of their contracts (3 to 25 years). “If producers of power refuse to cooperate, the government would continue to arbitrate or initiate forensic audits – one of which is already underway.”
He stressed that the production of non -competitive electricity, high production costs, ineffective distribution and theft were among the main engines of the increasing circular debt, which was currently rose to Rs2.4 Billion.
The fluctuations in exchange rates and low regulatory monitoring are even more tense in the sector. To solve the problem of circular debt, talks with commercial banks are underway.
The supplement of debt service (DSS) of RS3.23 per unit on the electricity consumer will continue. For its retirement from the main debt, the government will finalize a term sheet with banks to eliminate debt in the next five to six years. In particular, the government plans to borrow 1.25 billion of rupees from banks.
Leghari said: “This year we want to add the addition of the debt to zero.”
Meanwhile, transmission upgrades are also on cards, with potential funding from the Asian Development Bank and the World Bank in the next two to three years. Attacing the network’s bottlenecks could reduce the prices of electricity by another RS2 per unit, noted Leghari.
To cope with these problems, the government plans to privatize several entities in the electricity sector, starting with Islamabad Electric Company (IESCO), Gujranwala Electric Power Company (GEPCO) and Faisalabad Electric Supply Company (Fesco).
In the next phase, Lahore (Lesco), Sukkur (Sepco) and Multan electric companies (MEPCO) will follow.
Apart from this, the government is working on the automation of 40 million electric meters throughout the country. The plan plan will be completed in June. “We will encourage the private sector to demonstrate and invest and finish conversion in 3 to 4 years.”
In addition, to open the market, Leghari said that the Central Power Purchase Agency (CPPA) will no longer be the only electricity buyer because the government seeks to involve private actors both in the purchase and sale of energy. “The supply of electricity will be based on the least expensive principles and competitive auctions,” he added.
The Minister of Energy said that the government converts agricultural tube wells to solar energy Balutchistan at a cost of 55 billion rupees and concluding service agreements with captive industrial units for uninterrupted supply.
The long-awaited indicative production capacity expansion plan (IGCEP) is being completed and will be presented to the Prime Minister within two weeks, he said.