PM Announces Termination of Contracts with Five IPPs, Promises Relief on Electricity Bills

Islamabad—Prime Minister Shehbaz Sharif announced on Thursday that the federal government will be terminating contracts with five independent power producers (IPPs) in the first phase of reforms aimed at providing relief to consumers burdened by rising electricity bills.

The decision follows public outcry over inflated electricity bills across Pakistan, which led the government to reconsider its agreements with IPPs, particularly due to the inclusion of capacity payment charges in the bills.

Speaking at a cabinet meeting, PM Shehbaz revealed that this move would lead to significant savings, with consumers benefiting from Rs60 billion in annual savings, while the national exchequer will save Rs411 billion. “These five IPPs prioritized the nation’s interests over their own,” he said, adding that the “take or pay” payment system had ended for these producers.

The prime minister also indicated that tariffs will be reduced further by gradually revising agreements with other IPPs in the power sector, a step he believes will bring additional relief to consumers.

Shehbaz also pointed to a drop in inflation, highlighting that while inflation was over 30% during the same period last year, it has now fallen to 6.9%. He praised the cooperation of the five IPPs, likening their contribution to “the first drop of rain” in delivering public relief.