The Caretaker Federal Minister of Energy, Muhammad Ali, disclosed a stringent strategy to reduce the country’s electricity costs. Recognizing the pressing need to provide relief to consumers and ensure the sustainability of the energy sector, the minister outlined a multi-faceted approach that encompasses debt management, energy source diversification, and addressing challenges in the gas sector.
Restructuring Debt to Reduce Electricity Costs for Long-term Sustainability
During a media talk, Minister Muhammad Ali emphasized the government’s commitment to decreasing electricity costs by extending the payback term of debt. This strategic move is intended to ease the financial burden on energy providers and, in turn, lead to reduced electricity tariffs for consumers. By taking a long-term perspective on debt management, the government aims to stabilize the energy sector’s finances, thereby ensuring a more reliable and affordable power supply.
Moreover, the minister announced plans to expand the energy mix by incorporating Thar coal and renewables. This diversification of energy sources is expected to reduce dependence on costly fossil fuels and promote the use of cleaner and more sustainable alternatives. By harnessing the vast potential of Thar coal and renewable energy, the government intends to create a more balanced and cost-effective energy portfolio.
Addressing Gas Supply Challenges
In response to concerns about gas shortages and pricing, Minister Muhammad Ali acknowledged the possibility of gas load-shedding in the upcoming winters. However, he assured the public that every effort would be made to ensure that the shortage did not exceed that of the previous year. Additionally, the minister disclosed plans to increase gas prices, with the caveat that 60 percent of poor consumers would not be burdened with more than Rs. 500 each month. This approach aims to strike a balance between managing costs and protecting vulnerable segments of the population.
The minister noted that discussions between the Power and Privatization Divisions and institutions such as the World Bank and the International Finance Corporation (IFC) have taken place. Their current emphasis will shift towards Long-Term Concession Agreements (LTCAs) for ten power companies. Furthermore, the minister mentioned that the previous administrations had already approved the privatization of 14 power sector units, among them the LNG-based 747MW Guddu and 525MW Nandipur power plants.