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Energy Minister Awais Leghari announced significant reforms aimed at modernizing Pakistan’s energy sector, including the operationalization of an energy exchange platform. This move is designed to allow power plants to sell electricity directly to buyers, potentially reducing reliance on the national grid and addressing current challenges like high electricity prices and extensive circular debt.
Speaking to the Senate Standing Committee on Energy, Leghari outlined the government’s approach to tackling the sector’s pressing issues. He acknowledged the persistent problems of power outages, high transmission losses, elevated tariffs, limited renewable energy sources, and a massive circular debt. To address these issues, the government is focused on modernizing the power grid and privatizing distribution companies (DISCOs).
Leghari highlighted that one of the key reforms involves setting up an energy exchange where private consumers can purchase electricity directly from producers. This initiative aims to enhance market efficiency and provide more options for electricity procurement. “The plant which will produce electricity will sell it to the buyer through an energy exchange. Operationalizing this exchange is part of our reforms,” he said.
The minister also addressed concerns related to the Independent Power Producers (IPPs). He committed to providing relief regarding IPPs, acknowledging that the current high power tariffs are a major issue. “Our government is taking the issue of IPPs seriously. Whatever relief is possible regarding IPPs will be given to the people,” Leghari assured.
Leghari detailed that numerous power plants installed between 2015 and 2018 were funded by external capital and loans, with significant investment from China. The previous government had called for an audit of IPPs, but the matter was delayed due to mediation, which, according to Leghari, led to insufficient scrutiny and subsequent issues. He criticized the handling of the situation, stating that the heat rate audit report was compromised by the decision to mediate rather than investigate thoroughly.
Looking ahead, Leghari revealed plans to privatize DISCOs, stating that advertisements for their privatization would be issued next year. Over the coming months, financial advisers will assess market capacity to facilitate this transition.
These reforms are part of a broader strategy to enhance the efficiency of Pakistan’s energy sector and reduce the burden of high electricity costs on consumers. The government is optimistic that these changes will lead to a more sustainable and efficient energy market, providing relief to consumers and addressing longstanding challenges in the sector.
