The Power Task Force established by the government of Pakistan has reported major progress in improving the energy sector, according to the reports on Friday.
The reports say that significant savings and structural improvements are aimed at reducing long-term financial pressure on consumers.
Without understanding the full facts, it is unfair to criticise the performance of the Power Task Force. Its work shows several important achievements.
Power Task Force’s performance
Seven expensive power plants were shut down. These include six that ran on furnace oil.
These plants were hardly used but still received full payments, so their closure will reduce future financial burden.
The government has also renegotiated contracts with 54 independent power producers (IPPs), the reports said.
These agreements were changed from a strict “take or pay” model to a more flexible “hybrid take and pay” system. This led to an estimated lifetime savings of about Rs 4 trillion.
In addition to this, 12 disputes with thermal IPPs were settled through arbitration, saving or recovering more than Rs31 billion.
Unused government power plants were sold quickly, generating Rs48 billion. At the same time, around 3,600 idle employees were reassigned to distribution companies (DISCOs). This helps reduce unnecessary costs and staff shortages.
Circular debt stood at Rs2,410 billion on June 30, 2024. A surcharge of Rs3.23 per unit was used to secure Rs1,225 billion in financing at a much lower interest rate.
This amount was paid to IPPs, and Rs418 billion in late payment interest was waived. The loan will be repaid over four years using the same surcharge.
The delayed payment surcharge was also reduced from KIBOR plus 2.5 per cent to just 1 per cent. This helps slow the future buildup of circular debt.
Overall, these reforms are expected to save nearly Rs11 trillion. This would have otherwise have been passed on to consumers.
