Govt Cancels Expensive IPP Contracts, Saves Rs. 3.6 Trillion

In a major development aimed at reducing the financial burden on Pakistan’s power sector, the government has cancelled and renegotiated costly Independent Power Producer (IPP) contracts, achieving savings worth Rs. 3.6 trillion.

According to reports, these long-term agreements signed nearly two decades ago with around 40 private power companies had forced the government to pay huge capacity charges even for idle plants that generated no electricity. The cancellation and review of these contracts mark a significant step toward curbing inefficiencies and lowering electricity costs for consumers.

A senior official stated,

“This move will relieve the national exchequer of unnecessary payments and help stabilize the energy sector, which has been suffering due to inflated tariffs and non-operational plants.”

The industrial community welcomed the decision but called for accountability of those who approved such agreements in the past, arguing that a small group of IPPs had long exploited the system for massive financial gain.