The Pakistani government has decided to abandon the procurement of approximately 8,000 megawatts of expensive electricity, a strategic move projected to generate savings of nearly USD 17 billion, according to Federal Minister for Power Sardar Awais Ahmed Khan Leghari.
Speaking at a news conference on Sunday, the minister emphasized that the decision was taken purely on merit to alleviate financial pressures on the power sector and the federal government. This step forms part of broader reforms aimed at curbing inefficiencies, with losses incurred by distribution companies (DISCOs) currently absorbed by the government rather than passed directly to consumers.
The announcement comes amid ongoing efforts to stabilize the energy sector, reduce circular debt, and provide relief through lower tariffs.
Power Sector Reforms and Financial Gains
Significant progress has already been reported under these reforms. Losses in the power distribution system have dropped from Rs 586 billion to Rs 393 billion, while recoveries have improved by Rs 183 billion.
Circular debt, a longstanding burden, declined by Rs 780 billion in the previous year. The minister highlighted that abandoning the costly 8,000 MW procurement will prevent additional strain on public finances, freeing resources for other priorities.
These measures align with comprehensive changes to enhance efficiency, boost collection rates, and minimize wasteful expenditure in the sector.
Path to Affordable and Competitive Electricity
Power tariffs have already been reduced by 20 percent nationally over the last two years, offering some respite to households and industries. Looking ahead, the government, under Prime Minister Shehbaz Sharif’s leadership, aims to bring electricity prices in line with international rates within the next 18 months.
The minister stressed that these reforms prioritize merit-based decisions to ensure sustainable, affordable energy. While specific details on the abandoned projects (such as fuel types or plants) were not outlined, the focus remains on retiring or shifting away from high-cost sources to foster long-term economic stability and consumer relief.