Gov’t approves to revise agreements with 14 IPPs to reduce power cost

ISLAMABAD: The federal cabinet approved the Power Division’s proposal to revise agreements (negotiated settlement agreements) with 14 Independent Power Producers (IPPs), with the goal of reducing electricity costs and saving Rs 1.4 trillion for the national treasury.

Following discussions with the 14 IPPs under the revised agreements, the cabinet approved reductions of Rs 802 billion in profit and costs for these IPPs. Additionally, Rs 35 billion in excess profits from previous years will be deducted from these IPPs.Power Consumers to Face Rs 8.7b Burden in Electricity Bills

The cabinet meeting was chaired by Prime Minister Muhammad Shehbaz Sharif at the PM House. During the meeting, it was revealed that of these IPPs, 10 operate under the 2002 Power Policy, while four are part of the 1994 Power Policy. Moreover, an agreement with one IPP from the 1994 policy was canceled.
These revised agreements are expected to save the government Rs 1.4 trillion over their applicable period, with annual savings of Rs 137 billion, benefiting power consumers.

The prime minister commended the achievement, emphasizing that it would help reduce circular debt, lower electricity prices, and generate substantial national savings. He also praised the efforts of the Power Minister, Advisor, Secretary, and the members of the Task Force involved in finalizing the agreements.

In another decision, the cabinet, based on the recommendation of a committee formed for the government’s right-sizing initiative, approved the merger of the Ministry of Narcotics Control into the Ministry of Interior. After the merger, the Narcotics Control Division will operate as a wing under the Ministry of Interior, while the Anti-Narcotics Force will remain an attached department. This integration is expected to save Rs 183.25 million annually in administrative and operational costs.

The cabinet also approved the merger of the Aviation Division with the Ministry of Defence, which will result in annual savings of Rs 145 million in salaries, office expenditures, and other administrative costs. It was noted that civil aviation matters were previously under the Ministry of Defence until 2013. In line with the government’s austerity policy, this merger is expected to improve airspace management.

On the recommendation of the Cabinet Division, the cabinet approved the inclusion of a new Section 45-A in the Public Procurement Rules, 2004, allowing a procuring agency to delegate the entire procurement process or part of it to another procuring agency.

The cabinet also endorsed the Ministry of Human Rights’ recommendation to send the National Commission for Minorities Act 2024 to Parliament for approval.

Finally, the cabinet approved the Ministry of Law and Justice’s proposal to extend Dr. Muhammad Bashir’s employment contract as a Technical Member of the Environmental Tribunal, Islamabad, for an additional two years.