Federal Minister for Energy Awais Leghari has attributed the increasing electricity prices to a lack of strategic planning, asserting that reforms could potentially reduce rates to as low as Rs. 10 per unit. Speaking at a recent event, he announced plans to privatize 10 power companies by the end of this year and revealed that subsidies previously given to nine distribution companies have been halted.
Leghari emphasized efforts to reduce the cost of electricity production and stated that the government is currently reviewing contracts with power plants and independent power producers (IPPs). He noted that the power sector is grappling with multiple issues and urgently needs reforms, particularly concerning IPP agreements. He pointed out that the burden of circular debt and high-interest rates is impacting consumers significantly.
“The political situation within distribution companies has been dire, and past government directives were often ignored,” Leghari remarked, highlighting the challenges faced by the energy sector. He mentioned that a subsidy of Rs. 500 billion has been provided to support low-income households with their electricity bills, and proposals for privatizing electricity distribution companies are being considered.
Looking ahead, Leghari noted that Pakistan will require an additional 2,700 megawatts of electricity by 2034, which could be sourced from hydropower and solar energy. He assured that the government is in contact with financial advisors and the Privatization Commission, with plans to appoint financial advisors within a month to facilitate the transfer of three state-owned distribution companies to the private sector.
Leghari stated that currently, 70% of power plants are operating under government control and that efforts are underway to resolve issues by assigning responsibilities. He acknowledged past bureaucratic inefficiencies within the Power Division that hindered project completion. He reiterated that the main reasons behind rising electricity prices are the lack of strategic planning, the burden of circular debt, and high-interest rates on consumers. Additionally, he announced plans to establish EV charging stations nationwide and reduce petrol imports.