The federal government is considering several strategies to reduce electricity tariffs in response to the financial difficulties affecting the power sector. One proposal being evaluated is the potential shutdown of domestic Independent Power Producers (IPPs) operating in both public and private sectors.
The government is considering several strategies to reduce electricity tariffs, including cutting development budgets at federal and provincial levels to address the power sector’s financial issues.
A key strategy under consideration is targeting non-CPEC IPPs for capacity charge payments using financial instruments, aiming to alleviate the fiscal burden on the government.
The power rationalization plan has yet to gain approval from the IMF, a key player in Pakistan’s economic reforms.
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Furthermore, there is internal government resistance, with several officials questioning the long-term effectiveness of the proposed measures, fearing they may not resolve the sector’s structural issues.
The government is considering substantial reductions to the Public Sector Development Programme (PSDP) and provincial Annual Development Plans (ADPs) to free up funds for lowering electricity tariffs.
These budget cuts are part of broader efforts to address financial issues in the power sector and ease fiscal pressures.
