The federal government has developed a formula to reduce electricity prices by Rs20 per unit as according to official estimates, the price per unit can be reduced by up to twenty rupees, with a potential reduction of Rs9.70 per unit through the revision of agreements with Independent Power Producers (IPPs).
The working paper reveals that agreements with six IPPs will be terminated, while negotiations with 14 others have been completed. This revision of all IPP agreements will result in a reduction of Rs9.70 per unit in electricity prices.
The government plans to convince private power plants to adopt the "Electricity for Payments" policy. A summary regarding these IPPs is expected to be sent to the Cabinet next week.
According to the documents, convincing IPPs to adopt the "Electricity for Payments" policy will cut capacity payments by half. Currently, consumers pay Rs1,916 billion annually in capacity payments. With the new arrangement, this amount will reduce to Rs967 billion.
The Ministry of Energy is also working on eliminating eight different taxes imposed on electricity bills. These taxes cost consumers Rs. 954 billion annually. If these taxes are removed, electricity prices could fall by an additional Rs. 9 per unit.
The working paper further suggests that switching coal-fired power plants from imported coal to local coal would reduce electricity prices by another Rs. 2 per unit.
In a speech at a federal cabinet meeting yesterday, Prime Minister stated that the country’s economy is stabilizing, and the government plans to approach the IMF for a reduction in electricity prices.
He emphasized that industries, agriculture, and exports cannot grow unless electricity prices are reduced.
The PM confirmed that discussions are ongoing, with options available to lower electricity prices, and that further meetings would be held this week to expedite the process.
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