Interim Energy Minister Reveals Plan to Reduce Electricity Costs

Caretaker Federal Minister of Energy Muhammad Ali said on Monday that electricity costs will be decreased by extending the payback term of debt and expanding the energy mix through additions of Thar coal and renewables.

In a media talk, the minister revealed that the government was mulling the privatization of all ex-Wapda distribution companies (DISCOs) under a Long-Term Concession Agreement (LTCA) for 20-25 years. He said the final decision would be made by the federal cabinet.

In response to a query, the minister said there would be gas load-shedding in the coming winters, but every effort would be made that the shortage did not exceed that of the previous year.

Gas prices will be raised very soon, yet 60 percent of poor consumers will not be burdened with more than Rs. 500 each month. However, he noted that gas costs for large users would rise dramatically.

The minister mentioned that the Power and Privatization Divisions had meetings with the World Bank and the International Finance Corporation (IFC) and the focus would now be on LTCAs for ten power companies.

He added that 14 power sector units were already cleared for privatization by previous governments, including LNG-based 747MW Guddu and 525MW Nandipur power plants.

A summary would be presented to the federal cabinet for approval, with officials to consider transferring DISCOs to provinces, privatization, and LTCAs.

Muhammad Ali said LTCAs will follow global standards of management in the private sector against performance and investment targets, where contractors earn their returns based on the improvements they make. He stated that the same LTCA pattern would be used across DISCOs.

Meanwhile, the power division, in consultation with other stakeholders, will improve DISCOs’ management by changing the Board of Directors if needed. The minister remarked that while the caretaker setup may not be able to finish its undertakings during its tenure, it will at least initiate and advance the process.

  • Another way to reduce electricity cost, it to stop theft done on large scale, make defaulting institutions pay their bills, and renegotiating contracts with IPPs, cuz they are being paid for electricity which is not even being used by govt.

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