ISLAMABAD: Pakistan has scrapped plans to procure approximately 8,000 megawatts of high-cost electricity, a decision expected to save nearly $17 billion, the country’s power minister said on Sunday.
Power Minister Sardar Awais Ahmed Khan Leghari said the decision was taken “purely on merit” and formed part of broader efforts to stabilise the power sector under an ongoing reform programme.
Speaking at a news conference in Islamabad, Leghari said Pakistan had historically contracted more electricity generation capacity than required, resulting in large capacity payments for unused power and adding pressure on public finances.
The power sector has been a major source of fiscal strain, driven by surplus capacity, expensive long-term contracts and rising circular debt. Addressing these issues is a central condition of Pakistan’s $7 billion loan programme with the International Monetary Fund, approved in 2024.
Leghari said recent reforms had begun to show results. Losses in the power sector declined to Rs393 billion ($1.4 billion) from Rs586 billion ($2.1 billion), while circular debt was reduced by Rs780 billion ($2.8 billion) over the past year. Recoveries also improved by Rs183 billion ($660 million), he added.
The minister said the federal government was absorbing losses incurred by power distribution companies rather than transferring the burden to consumers. He added that electricity tariffs had fallen by around 20 percent nationwide over the past two years.
Leghari expressed confidence that power prices could be aligned with international benchmarks within the next 18 months, provided reforms continue.
Power sector restructuring remains one of the most politically sensitive components of Pakistan’s IMF-backed adjustment programme, with the government aiming to cut losses, improve recoveries and avoid costly new capacity commitments to restore fiscal stability and investor confidence.
