Cabinet Approves Revised Power Agreements with 14 IPPs

Cabinet Approves Revised Power Agreements with 14 IPPs

Islamabad, January 14, 2025 – In a significant move to alleviate electricity costs and address circular debt, the federal cabinet, under the leadership of Prime Minister Shehbaz Sharif, approved revised agreements with 14 Independent Power Producers (IPPs).

The decision is projected to save the national exchequer a staggering Rs 1.4 trillion over the lifespan of these agreements.

The cabinet meeting, held at the PM House, discussed recommendations from the Power Division. It was revealed that the revised agreements would result in Rs 802 billion in reduced profits and costs from these IPPs. Additionally, Rs 35 billion in excess profits from prior years will be deducted.

Among the 14 IPPs, 10 operate under the 2002 Power Policy, while four were established under the 1994 Power Policy. One agreement from the 1994 policy has been canceled altogether. The revisions promise annual savings of Rs 137 billion, directly benefiting consumers and reducing the country’s reliance on costly electricity production.

Prime Minister Shehbaz Sharif hailed the development as a milestone in reducing circular debt and lowering electricity tariffs. He commended the Power Minister, advisors, and task force members for their dedicated efforts. “This achievement reflects our commitment to financial discipline and providing relief to the people,” said Shehbaz.

Administrative Mergers to Boost Efficiency

In line with its austerity drive, the cabinet approved the merger of the Ministry of Narcotics Control with the Ministry of Interior. This integration, transforming the Narcotics Control Division into a wing under the Interior Ministry, is expected to save Rs 183.25 million annually in administrative and operational costs.

Similarly, the Aviation Division will be merged with the Ministry of Defence, reverting to the pre-2013 structure. This shift is anticipated to save Rs 145 million yearly, streamline administrative functions, and enhance airspace management.

Additional Approvals

The cabinet endorsed amendments to the Public Procurement Rules, 2004, introducing Section 45-A, which allows delegating procurement processes to other agencies.

These decisive actions reflect the government’s focus on fiscal responsibility and governance reforms to benefit the nation.