Minister hints at Rs10-12 per unit reduction in electricity prices

ISLAMABAD: Federal Energy Minister Awais Leghari has said that consumers can expect major relief in electricity prices in the coming days, as ongoing talks with the International Monetary Fund (IMF) could lead to a reduction of Rs10-12 per unit.

Speaking to reporters at Parliament House on Thursday, he said that talks with independent power producers (IPPs) have already benefited the public, reducing power tariffs and saving Rs1,100 billion. After renegotiating with IPPs, government power plants will also be reviewed, which will lead to further savings for consumers, he added.

The minister’s statement came after Jamaat-e-Islami (JI) announced earlier in the day a nationwide protest on January 17 against the government’s failure to reduce electricity prices.

Addressing a press conference, JI Chief Hafiz Naeem-ur-Rehman criticised the government over the economic situation and said that while Prime Minister claims improvements in the stock market and economic indicators, the prices of essential items like petrol and food remain unaffected.

Raising concerns about Independent Power Producers (IPPs) the JI chief said that despite their closures, electricity bills have not decreased. He alleged that the government gives Rs2 trillion to IPPs, exempts them from income tax, and burdens salaried individuals with taxes.

Leghari said that 15 more IPP contracts would be presented to the cabinet for review. He also criticized K-Electric for demanding a massive amount under multi-year tariff adjustments, arguing that it should be lower. The National Electric Power Regulatory Authority (NEPRA) will decide in the public’s interest, he added. 

Regarding electricity theft, Leghari said that discussions were held with the Khyber Pakhtunkhwa chief minister to curb the practice. However, he claimed the provincial government’s performance in tackling power theft was unsatisfactory. 

Earlier, in a meeting of the National Assembly’s power committee, Leghari disclosed that capacity charges account for 75% of total electricity costs. He said the federal government had allowed uninterrupted power supply to high-theft feeders in KP as per an agreement, but the provincial administration failed to curb power theft, leading to an additional loss of Rs6 billion. 

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On captive gas use, he said a decision would be made within a month. Residential consumers have already received Rs4 per unit relief in electricity bills, and further reductions of Rs10-12 per unit are possible. Agreements with five IPPs have been terminated, while the cabinet has approved revised tariffs for eight bagasse-based power plants. Negotiations are ongoing with 16 more IPPs, after which government-owned power plants will also be reviewed. 

Leghari further said that the next step would be revising returns on equity for government power plants. He claimed that K-Electric was seeking Rs500 billion in profits over the next five to seven years, which he deemed excessive. The final decision, he said, rests with NEPRA, but consumers in Khyber Pakhtunkhwa would also be affected.