ISLAMABAD: The Power Division has projected savings of Rs 3.498 trillion from the renegotiation and termination of contracts with 29 Independent Power Producers (IPPs) and Government Power Plants (GPPs) over their remaining tenures, which range from 3 to 20 years.
During a meeting of the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, officials disclosed that six IPP contracts had been terminated, while revised tariff agreements were signed with nine bagasse-based power plants, including Shah Taj Sugar Mill, and 14 IPPs under the 1994 and 2002 Power Policies.
The Ministry of Energy’s reports indicate that the early termination of five IPPs alone will save approximately Rs 411 billion, while tariff revisions for eight bagasse power projects and 14 other IPPs will generate savings of Rs 238 billion and Rs 922 billion, respectively. Additionally, renegotiations with GENCOs and RLNG-based power plants have led to projected savings of Rs 354 billion from Nandipur and Guddu, Rs 1,808 billion from Haveli Bahadur Shah, Balloki, and QATPL power plants, and Rs 498 billion from PTPL.
The Standing Committee was assured that these savings would be passed on to consumers once the National Electric Power Regulatory Authority (NEPRA) approves tariff modifications, with an official announcement expected from the Prime Minister.
The meeting also highlighted the ongoing debate over the Net Metering policy. The Power Division confirmed that while existing consumers will not be affected, new net metering consumers may face reduced buyback rates. The Federal Cabinet has yet to approve a proposed rate reduction from Rs 27 to Rs 10 per unit, with the Prime Minister directing further stakeholder consultations.
Tensions flared during the session, with Minister for Power Sardar Awais Leghari and Opposition Leader Senator Shibli Faraz clashing over policy decisions and the government’s handling of the energy sector. Faraz criticized mid-course policy changes, warning they could deter future investment, while Leghari defended the government’s measures, citing International Monetary Fund (IMF) support as validation.
Meanwhile, the circular debt of the power sector, currently at Rs 2.4 trillion, is expected to drop to Rs 400-450 billion following the completion of a Rs 1.23 trillion loan restructuring process. However, committee members expressed concerns that the benefits of contract renegotiations were not being fully transferred to consumers, calling for greater transparency and accountability in the sector.
Story by Mushtaq Ghumman
