PM Approves Power Plan to Save $17B
Staff Report
Islamabad: The Prime Minister, Shehbaz Sharif, has approved Pakistan’s new 10-year Indicative Generation Capacity Expansion Plan (IGCEP 2025-35) to reduce the burden of $17 billion on the national exchequer.
Total savings in Pakistani rupees amount to Rs 4.7 trillion.
While sharing key points of a plan approved by the premier, the Ministry of Energy Power Division said that the country would save $10 billion or Rs 2.79 trillion due to revisions in completion dates of the power projects.
In plan, the government has also shelved power projects of 7967 MW that would result in a saving of $7 billion or Rs 1.95 trillion.
The government has also estimated a reduction in electricity prices up to Rs 2 per unit.
Key Points
The government has selected projects for the first time based on merit and transparency.
It has formulated a plan keeping in view of the national interest instead of benefiting any individual, group, or party. The government has shelved expensive and unnecessary projects.
Effective Expansion in Power Generation
Under the original plan, there have been new projects of 14,984 MW. But the government has restricted them to 7,017 MW. The government has also prioritized projects of 7,987 MW based on local resources, the preferred use of local resources, and the reduction of Dependence on Imported Fuel.
The priority will be given to local resources such as hydro, solar, nuclear, and wind. The government will reduce the dependence on imported fuel (such as coal, gas) to save billions of dollars in foreign exchange annually.
The government will form a Sustainable and Competitive Electricity Market. The prime minister has approved future electricity projects based on competitive bidding and will encourage private sector participation.
The government has also decided to terminate the Government Guarantee and Purchase Obligations in power projects. There will be no longer purchase of additional electricity, and the government will not provide government guarantees for additional power projects. So, Therefore, there will be no permanent elimination of any kind of capacity charges.electricity prices
The Prime Minister chaired a meeting on reforms in the energy sector.
After the recent reduction in electricity tariffs by about Rs 7.5 per unit, the government of Pakistan is implementing an effective strategy for sustainable reforms in the energy sector for further convenience of the people, the Prime Minister said in a statement.
The Prime Minister has directed to complete projects like Diamer-Bhasha Dam on a priority basis to establish an effective system of energy production and abundant water storage in the country.
“Any delay in the completion of energy projects is unacceptable, Prime Minister said, adding that a free market for electricity production will be established in the country soon.
Premier said that the establishment of the market will make it possible to supply electricity on a competitive basis, which will lead to a sustainable supply of electricity and further reduction in tariffs.
When the IGCEP was reviewed on the Prime Minister’s instructions, it became clear that there is room for further improvement in it. The Prime Minister was informed, adding that after working day and night, the ministry had redeveloped it according to the ground realities and future needs.
Briefing the meeting, the power division said that the path has been paved for competitive bidding and sale of electricity at the lowest price in power generation projects for the next ten years.
The prime minister was informed that a total of $17 billion (Rs. 4743 billion) will be saved by removing expensive projects from the plan and changing the dates of project completion.
Local reserves and alternative sources such as solar, nuclear, and hydroelectric power will be preferred over imported fuels for power generation. This strategy will save several billion dollars in foreign exchange reserves.
It was further informed that the government would gradually abandon power purchase and capacity payments to power generation companies.
The Prime Minister appreciated Federal Minister for Power Sardar Owais Leghari and his team for saving Rs 4743 billion for the country and termed it as another historic achievement.
