ISLAMABAD: Pakistan is making preparations to stop capacity payments to independent power producers (IPPs) by dissolving the mechanism of take-or-pay, Pakistani state media reported on Friday.
Take-or-pay is referred to as capacity payments in Pakistan where the government has to pay private companies irrespective of how much of the power they generate is transferred to its grid.
Pakistan approved dozens of private projects by IPPs, financed mostly by foreign lenders, a decade ago to tackle chronic power shortages. But the deals, featuring incentives such as high guaranteed returns and commitments to pay even for unused power, ultimately resulted in excess capacity after a sustained economic crisis slashed consumption.
This month, Prime Minister Shehbaz Sharif’s cabinet approved settlement agreements with eight bagasse-based IPPs with the aim to reduce electricity prices and save the national exchequer billions of rupees, the Radio Pakistan broadcaster reported.
“The agreement between IPPs and the government’s Energy Task Force is a significant milestone, which can result in saving of 300 billion rupees ($1.07 billion) of the national exchequer,” the broadcaster said.
Short of funds, successive Pakistani governments have built those fixed costs and capacity payments into consumer bills, sparking protests by domestic users and industry bodies.
In October, PM Sharif said his government was terminating purchase agreements with five IPPs to rein in electricity tariffs as households and businesses buckled under soaring energy costs, according to state media. Pakistan’s Central Power Purchasing Agency was due to approach the National Electric Power Regulatory Authority (NEPRA) for a reduction in the electricity tariff generated from these power plants.
There is a possibility of Rs3.50-6.50 decrease in the electricity tariff as a result of government reforms as the government has pledged to pay outstanding dues within 90 days as prescribed in the agreements, Radio Pakistan reported on Friday.
“The government has also expressed resolve to promote private partnership for development of energy sector,” the report read.
The need to revisit power deals was a key issue in talks for a critical staff-level pact in July with the International Monetary Fund (IMF) for a $7-billion bailout. The program was approved in September.
Pakistan has also been holding talks on reprofiling power sector debt owed to China and structural reforms, but progress has been slow. It has also vowed to stop power sector subsidies.
Pakistan prepares to terminate take-or-pay contracts with independent power producers
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Pakistan prepares to terminate take-or-pay contracts with independent power producers
- Pakistan approved a decade ago dozens of mostly foreign-financed private projects by IPPs to tackle chronic power shortages
- PM Sharif’s cabinet this month approved settlement agreements with eight IPPs with the aim to reduce power tariff, expenses
Islamic military coalition, Pakistan to deepen cooperation to combat ‘terrorism’ — Pakistani military
- Islamic Military Counter Terrorism Coalition is a 43-member alliance that includes Pakistan, Saudi Arabia, Egypt, Jordan, UAE and other nations
- The Pakistani military statement comes after a meeting between IMCTC secretary-general and the chief of Pakistani defense forces in Rawalpindi
ISLAMABAD: Pakistan and the Islamic Military Counter Terrorism Coalition (IMCTC) have reaffirmed their commitment to deepening cooperation, including intelligence sharing and capacity building, to jointly combat “terrorism” and “extremism,” the Pakistani military said on Monday.
The IMCTC is a 43-member military alliance that was formed on Saudi Arabia’s initiative in Dec. 2015 to consolidate Muslim countries’ efforts in countering “terrorism.”
A 17-member IMCTC delegation is visiting Pakistan from Feb. 2-6 to conduct a training at National University of Sciences and Technology on “Re-integration and Rehabilitation of Extremist Elements,” according to the Pakistani military.
On Monday, IMCTC Secretary-General Maj. Gen. Mohammed bin Saeed Al-Moghedi held a meeting with Chief of Pakistani Defense Forces Field Marshal Asim Munir to discuss cooperation among IMCTC member states.
“During the meeting, matters of mutual interest were discussed, with particular emphasis on regional security dynamics and enhanced cooperation in counter-terrorism efforts,” the Inter-Services Public Relations (ISPR), the Pakistani military’s media wing, said in a statement.
“Both sides reaffirmed their shared commitment to combating terrorism and extremism through collaborative strategies, intelligence sharing, and capacity building among member states.”
The IMCTC features Pakistan, Saudi Arabia, Türkiye, Afghanistan, Egypt, Jordan, Qatar, Palestine, UAE, Bangladesh and other nations. In 2017, Pakistan’s former army chief Gen. (retd) Raheel Sharif was appointed as the IMCTC commander-in-chief.
During discussions with Major General Al-Moghedi, Field Marshal Munir appreciated the role of IMCTC in fostering stability and promoting coordinated counterterrorism initiatives across the Islamic world, according to the ISPR.
The IMCTC secretary-general acknowledged Pakistan’s significant contributions and sacrifices in the fight against militancy and lauded the professionalism of Pakistan’s armed forces.
“The meeting underscored the resolve of both sides to further strengthen institutional collaboration for peace, stability, and security in the region,” the ISPR added.
Pakistan enjoys cordial ties with most Muslim countries around the world, particularly Gulf Cooperation Council countries. In Sept. 2025, Pakistan signed a landmark defense pact with Saudi Arabia according to which an act of aggression against one country will be treated as an act of aggression against both.
