Federal Minister for Energy Owais Ahmed Khan Leghari, addressing a ceremony in Islamabad, shed light on various challenges and reforms in Pakistan's energy sector.
He emphasized the need for competitive electricity procurement, affordability, and consumer protection in the face of rising power tariffs and increasing circular debt.
Leghari revealed that agreements have been made with 17,000 megawatt plants for the next decade, though 80% of these plants do not meet their capacity. He questioned the nature of power purchase agreements, saying that it's not just the obligation of the Central Power Purchasing Agency to bear all the losses, and disclosed that competitive power procurement will begin in March 2025.
He announced plans to add 10,000–12,000MW through net metering over the next decade. However, he noted that net metering is currently being utilised primarily by the country’s wealthiest, leaving middle-class citizens excluded from the system.
Addressing rising electricity costs, Leghari said, “Electricity has become so expensive that consumers can no longer afford the bills.”
He highlighted discrepancies in tariffs, questioning why consumers in Sukkur bear the burden of losses in Peshawar. He called for electricity rates to be based on the performance of local distribution companies (DISCOs). "For the Power Division, nothing else is under consideration at this time except low-cost electricity," he remarked.
Leghari said the Energy Ministry is grappling with the risk of increased circular debt due to potential gas supply cuts to captive power plants. The IMF has given a deadline of January 31 to disconnect gas from these plants, with a final decision expected before the IMF’s economic review in February, he added.
"Increasing gas prices can generate an additional revenue of Rs200 billion. If the gas supply is suspended, other consumers' tariffs will have to be increased further. The government has to revise gas prices by January 23," he added.
He further informed the gathering that the government is also considering imposing a 5% levy on captive power plants and increasing gas prices by Rs1,500–1,800 per MMBTU, potentially generating an additional Rs200 billion in revenue.
Surplus imported LNG remains a significant issue, with five cargoes cancelled recently due to the power sector’s inability to absorb the fuel. Captive power plants currently utilise 150 million cubic feet of LNG daily, generating Rs300 billion in annual revenue.
Leghari praised the independent boards of governors in DISCOs, noting a reduction in power losses. He pointed out that from July to November of the current fiscal year, DISCOs reduced losses significantly to Rs170 billion compared to the Rs223 billion loss incurred during the same period last year.
"K-Electric was asking for an increase of Rs10 in tariff. By our calculations, the tariff should have been increased Re1, as the increase in electricity tariff of K-Electric affects the entire country," he insisted.
Leghari further said that in the last 9 months, they had challenged the status quo in the energy sector, adding that the Energy Ministry is evaluating the feasibility of major projects like the Bhasha Dam and nuclear power initiatives. While Leghari affirmed the effectiveness of the Bhasha Dam, he questioned the affordability of its electricity and transmission line, stating that grid electricity costs could increase by Rs5 per unit due to the project.
