Caretaker government considering options to slash power costs

ISLAMABAD: The Caretaker Minister for Power Muhammad Ali said that electricity costs would decrease by extending debt repayment periods and shifting towards renewables and Thar coal. However, he didn’t reveal the exact outstanding bills.

According to Dawn.com, during a press briefing, Minister Ali discussed plans to privatise all 10 distribution companies previously under ex-Wapda on a Long-Term Concession Agreement (LTCA) for 20-25 years.

However, the final decision on the matter, including the possibility of giving Discos to respective provinces or complete privatisation, will be made by the federal cabinet.

During the press briefing, when questioned about potential gas shortages in the upcoming winter, Ali acknowledged that load shedding might occur but assured that efforts would be made to minimise it compared to the previous year.

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Additionally, the minister revealed that gas prices would soon increase. However, he said that measures would be taken to prevent low-income consumers from being burdened with significant price hikes, while larger consumers could expect substantial increases.

Meanwhile, the minister discussed meetings between the power and privatisation divisions with the World Bank and the International Finance Corporation (IFC) regarding LTCAs for 10 power companies. He cited the example of the Islamabad International Airport privatisation project managed by the IFC as a potential model for the agreements.

As per the media reports, the privatisation list includes 14 power sector units, including LNG-based power plants and other facilities. The final decision on whether to proceed with LTCA agreements or other privatisation options will be determined by the federal cabinet.

Ali mentioned the benefits of LTCA agreements, including job security and employee retention, and indicated that the caretaker government would initiate and advance the privatisation process during its limited tenure.

He also proposed structuring the LTCA agreements in a way that incentivises private sector investment and performance improvement while maintaining government ownership of the Discos.

In the meanwhile, the power division is working on evaluating the boards of various companies and considering changes to improve management within the Discos.