The federal government has submitted a comprehensive plan to lower power rates by Rs6 per unit to the International Monetary Fund (IMF). The government is working to help consumers suffering from excessive electricity bills, and this proposal is one initiative in that direction.
As per the Power Division sources, the proposal entails the cooperative arrangement of Rs 2,800 billion in finance by the federal and provincial governments. The fourth province governments would provide the remaining Rs1,400 billion of this sum through the National Finance Commission (NFC) Award, with the federal government contributing Rs1,400 billion of it.
When analyzing the province contributions, it is anticipated that Punjab will contribute Rs699 billion, Sindh Rs351 billion, Khyber Pakhtunkhwa Rs231 billion, and Balochistan Rs119 billion in total. These monies are mostly going to be used for the closure of inefficient power plants, contract settlement with independent power producers (IPPs), and repayment of local loans for specific power plant repayments.
According to sources, the monies will either be used to terminate or modify the terms of the contracts with the IPPs. Reducing government-owned power plants’ revenues is another feature of the proposal that may result in a Rs1.15 unit drop in electricity rates. In addition, power rates are anticipated to drop by an additional Rs2.83 per unit by paying off the Rs2,300 billion circular debt.
The IMF’s permission is currently awaited by the federal government to move forward with the implementation of this proposal, which will significantly reduce the cost of power for consumers nationwide. To significantly reduce electricity prices, the plan also includes the option of canceling or renegotiating contracts with certain IPPs.
