Pakistan’s government has achieved estimated savings of more than Rs. 80 billion after renegotiating agreements with wind and solar power producers as part of broader energy sector reforms.
Officials from the Power Division briefed the Economic Coordination Committee (ECC) on the progress, highlighting major reductions in electricity tariffs and contract costs.
High Tariffs Triggered Review
Authorities said older wind power agreements had tariffs as high as Rs. 42 per unit. In comparison, newer cost-plus models bring tariffs down to around Rs. 17 per unit.
This significant gap prompted the government to revisit existing contracts and negotiate better terms with power producers.
Key Changes in Agreements
A task force on power sector reforms successfully renegotiated deals with 14 wind power plants and one solar project. The revised agreements include:
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Reduction in return on equity
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Lower operation and maintenance costs
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Changes in indexation formulas
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Waiver of late payment interest
These adjustments are aimed at reducing the overall financial burden on the power sector.
Breakdown of Savings
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Rs. 38.9 billion savings from three wind projects under the 2013 upfront tariff policy
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Adjustments with 11 wind plants under post-2018 cost-plus tariffs, including exchange rate rationalisation
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Rs. 45.7 billion savings from amendments to a government-owned solar project
Most of the solar-related savings come from waiving late payment interest and improving payment mechanisms.
Reform Momentum Continues
The development is part of the government’s wider effort to control rising electricity costs and ease pressure on consumers and public finances.
Officials say further reforms may follow as authorities continue reviewing power purchase agreements across the sector.
