No Electricity Price Reduction Expected for 6 Months

Special Assistant to PM on Power Muhammad Ali on Tuesday informed the Senate Standing Committee on Power that negotiations with Independent Power Producers (IPPs) are in their final stages but will require an additional three months to conclude while the financial benefits to the public—estimated between Rs. 200-300 billion—will take approximately six months to materialize. During the meeting, committee members raised questions about the impact of the dollar exchange rate on the cost of imported coal, used in Bagasse-powered IPPs. SAPM Power acknowledged the difficulty in setting prices for Bagasse Energy due to fluctuating coal prices. He also discussed the government’s prior attempts to reduce electricity costs and recalled a 2019 study that culminated in a report in 2020 for making big changes in IPP policies. Under the 1994 policy, IPPs received upfront tariffs, and in the 2002 policy, they were offered equity returns. Muhammad Ali noted that after these returns, IPP profits soared by over 27 percent. The committee demanded prompt implementation of the Task Force’s recommendations and called for completing the IPP talks as soon as possible.