Pakistan Ends Major Power Purchase Contracts Amid Energy Crisis

Pakistan's government has renegotiated power purchase agreements with utilities, including its largest private utility, to lower energy costs. The move aims to address soaring electricity tariffs amid financial constraints and includes changes to deals critical for IMF bailout negotiations.

In a significant move to cut costs, Pakistan's government has renegotiated power purchase agreements with several utilities, including its largest private utility firm. This effort is aimed at reducing electricity tariffs as both households and businesses face mounting energy prices.

Prime Minister Shehbaz Sharif confirmed this initiative, stating an agreement with five independent power producers could save an estimated 60 billion rupees annually. This development was crucial in discussions with the International Monetary Fund (IMF) for a $7 billion bailout agreement.

Previously, many private projects by independent power producers were approved to address energy shortages. However, these deals led to excess capacity due to incentives like high guaranteed returns. The government is now addressing these legacy costs by phasing out associated payments to ease the financial burden on consumers.

(With inputs from agencies.)