KARACHI: Pakistan is renegotiating contracts with independent power producers to rein in “unsustainable” electricity tariffs, the head of the power ministry said, as households and businesses buckle under soaring energy costs.
Rising power tariffs have stirred social unrest and shuttered industries in the $350 billion economy, which has contracted twice in recent years as inflation hit record highs.
“The existing price structure of power in this country is not sustainable,” Awais Leghari, a federal minister heading Pakistan’s Power Division, told Reuters in an interview on Friday.
He said discussions were under way between power producers and the government because “there is a clear understanding on both sides that the status quo can’t be maintained.”
Leghari stressed that all stakeholders would have to “give in to a certain point” — though without compromising completely on business sustainability — and this would have to be done “as soon as possible.”
Faced with chronic shortages a decade ago, Pakistan approved dozens of private projects by independent power producers (IPPs), financed mostly by foreign lenders. The incentivized deals included high guaranteed returns and commitments to even pay for unused power.
However, a sustained economic crisis has slashed power consumption, leaving the country with excess capacity that it needs to pay for.
Short of funds, the government has built those fixed costs and capacity payments into consumer bills, sparking protests by domestic users and industrial associations.
Four sources in the power sector told Reuters changes to contracts demanded included slashing guaranteed returns, capping dollar rates and moving away from paying for unused power. The sources requested anonymity as they were not authorized to speak to the media.
On Saturday, local media outlet Business Recorder said in a report citing sources that 24 conditions have been proposed for the transition of capacity-based model to take-and-pay model.
However, Leghari told Reuters that no new draft agreements or specific demands had been officially sent to power companies and said the government would not force them to sign new watered down contracts.
“We would sit and talk to them in a civil and professional manner,” he said, adding that the government has always maintained contractual obligations to investors, both foreign and local. He said contract revisions would be by “mutual consent.”
Energy sector viability was the focus of a critical staff level pact in May with the International Monetary Fund (IMF) for a $7 billion bailout. The IMF’s staff report stressed the need to revisit power deals.
Pakistan has already initiated talks on reprofiling power sector debt owed to China as well as negotiations on structural reforms, but progress has been slow. Pakistan has also committed to stop power sector subsidies.
Leghari said current rates were not affordable for domestic or commercial consumers and this was hurting growth because power prices were no longer regionally competitive, putting critical exports at a disadvantage.
He said the aim was to bring tariffs down to 9 US cents per unit for commercial users from about 28 cents currently.
Pakistani minister says government renegotiating power deals to cut electricity tariffs
https://arab.news/76fj4
Pakistani minister says government renegotiating power deals to cut electricity tariffs
- Energy sector viability has been the focus of a critical staff level pact with the IMF for a $7 billion bailout
- Awais Leghari says government wants to bring down tariffs from 28 cents to 9 cents for commercial users
Pakistan warns of heavy rain, snowfall and landslide risks in northern districts from today
- Khyber Pakhtunkhwa says snowfall can make roads slippery in tourist resorts like Naran, Kaghan and Kalam
- Provincial authorities warn tourists and travelers to avoid unnecessary movement during the weather spell
PESHAWAR: The Provincial Disaster Management Authority (PDMA) of Pakistan’s Khyber Pakhtunkhwa warned Friday heavy rains and snowfall expected from today through Dec. 15 could trigger landslides, road closures and hazardous travel conditions across the northern districts.
The alert follows forecasts of widespread precipitation in the province’s mountainous regions, where steep slopes and winter road conditions routinely heighten the risk of disruption.
Dense fog is also expected in the plains, including Peshawar, Mardan, Nowshera and Swabi, potentially affecting visibility and slowing motorway traffic.
“The Provincial Disaster Management Authority has issued alerts to all relevant departments to take advance precautionary measures,” the agency said.
It warned that snowfall could make roads slippery in areas such as Naran, Kaghan, Kalam and Jabba, while heavy rain and snow “may increase the risk of landsliding.”
Residents living close to rivers, streams and seasonal water channels were advised to remain vigilant.
Rain and snowfall are also forecast in Chitral, Dir, Swat, Shangla, Kohistan, Mansehra, Abbottabad, Galyat, Haripur, Buner, Mohmand, Khyber, Orakzai, Kurram and North and South Waziristan.
Tourists and travelers were urged to avoid unnecessary movement during the weather spell. Daytime temperatures are expected to fall sharply as the cold system intensifies.
Local administrations have also been instructed to keep drainage systems active ahead of the expected rainfall.
Pakistan has faced a series of extreme-weather emergencies in recent years — from devastating floods in 2022 to recurring droughts and record heatwaves — despite contributing less than one percent to global carbon emissions.
Officials say climate volatility has made mountainous regions more prone to landslides and flash floods, highlighting the importance of early warnings and local preparedness.
