Minister says govt aims to bring tariffs down to 9 US cents per unit for commercial users from about 28 cents
\n Islamabad
\nThe coalition government led by the PML-N is renegotiating contracts with independent power producers (IPPs) to rein in \u201cunsustainable\u201d electricity tariffs, Energy Minister Awais Leghari said as households and businesses buckle under soaring energy costs.
\nRising power tariffs have stirred social unrest and shuttered industries in the $350 billion economy, which has contracted twice in recent years as inflation hit record highs.
\n\u201cThe existing price structure of power in this country is not sustainable,\u201d Awais Leghari, the federal minister heading Power Division, told Reuters in an interview on Friday.
\nHe said discussions were underway between power producers and the government because \u201cthere is a clear understanding on both sides that the status quo can\u2019t be maintained.\u201d
\nLeghari stressed that all stakeholders would have to \u201cgive in to a certain point\u201d \u2014 though without compromising completely on business sustainability \u2014 and this would have to be done \u201cas soon as possible\u201d.
\nFaced with chronic shortages a decade ago, Pakistan approved dozens of private projects by the IPPs, financed mostly by foreign lenders. The incentivised deals included high guaranteed returns and commitments to even pay for unused power.
\nHowever, a sustained economic crisis has slashed power consumption, leaving the country with excess capacity that it needs to pay for.
\nShort of funds, the government has built those fixed costs and capacity payments into consumer bills, sparking protests by domestic users and industrial associations.
\nFour sources in the power sector told Reuters changes to contracts demanded included slashing guaranteed returns, capping dollar rates and moving away from paying for unused power. The sources requested anonymity as they were not authorised to speak to the media.
\nEnergy sector viability was the focus of a critical staff level pact in May with the International Monetary Fund (IMF) for a $7 billion bailout. The IMF\u2019s staff report stressed the need to revisit power deals.
\nPakistan has already initiated talks on reprofiling power sector debt owed to China as well as negotiations on structural reforms, but progress has been slow. Pakistan has also committed to stop power sector subsidies.
\nLeghari said current rates were not affordable for domestic or commercial consumers and this was hurting growth because power prices were no longer regionally competitive, putting critical exports at a disadvantage.
\nHe said the aim was to bring tariffs down to 9 US cents per unit for commercial users from about 28 cents currently.
\nEarlier this week, the minister had signalled that that a \u201cpermanent relief\u201d for consumers was on the anvil.
\nSpeaking on media programme \u201cAaj Shahzeb Khanzada Kay Sath\u201d, Leghari said that a detailed review of matters related to IPPs had also been completed, and the nation would soon hear \u2018good news\u2019 in this regard,
\nHowever, any one-sided change in IPP contracts is unlikely, as Leghari stated last month that the government could not terminate agreements unilaterally, warning that such a move would create a \u201cReko Diq-like situation\u201d.
\nIn the past 15 years, the country has suffered losses of nearly Rs5,082 billion due to the government\u2019s failure to control the menace of circular debt, leading to an annual loss of Rs370 billion.<\/p>\n","protected":false},"excerpt":{"rendered":"
Minister says govt aims to bring tariffs down to 9 US cents per unit for commercial users from about 28 cents Islamabad The coalition government led by the PML-N is renegotiating contracts with independent power producers (IPPs) to rein in \u201cunsustainable\u201d electricity tariffs, Energy Minister Awais Leghari said as households and businesses buckle under soaring […]<\/p>\n","protected":false},"author":2,"featured_media":429839,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-429813","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-news"},"yoast_head":"\n