Pakistan’s IPP Contract Cancellation Sparks Debate on Electricity Price Reduction
Islamabad, Pakistan – The recent cancellation of contracts between the government and five Independent Power Producers (IPPs) has sparked intense debate about potential reductions in electricity prices for the general public.
According to experts, the cancellation of these contracts will not significantly impact electricity prices for consumers. Affia Malik, energy expert at the Pakistan Institute of Development Economics, explained that the cancellation would not provide significant relief in terms of capacity payments.

“The contracts of the five companies were set to expire within the next year and a half anyway,” Malik said. “There are still 41 companies operating under the 1994, 2000, and 2006 power policies, as well as power plants established in 2015 and the government’s own hydro and nuclear power plants.”
Rana Ihsan Afzal, Coordinator to the Prime Minister of Pakistan, acknowledged that the cancellation of these contracts would not immediately reduce electricity bills for consumers. However, he noted that the government is renegotiating contracts with other IPPs and discussing debt restructuring with Chinese power plants, which may lead to reduced electricity bills in the future.
“The cancellation has led to a reduction of approximately 70 paisas per unit in electricity tariffs, resulting in a saving of 70 billion rupees for the government,” Afzal said.
Key Highlights:
- Five IPP contracts cancelled, but no significant impact on electricity prices expected
- No significant relief in capacity payments due to contract cancellation
- 41 companies still operating under previous power policies
- Government renegotiating contracts with other IPPs and discussing debt restructuring with Chinese power plants
- 70 billion rupees saved by government due to contract cancellation
The development has sparked mixed reactions from stakeholders, with some hailing the move as a step towards reforming the power sector, while others express skepticism about its impact on electricity prices.
“The government should ensure that the savings from the cancelled contracts are passed on to consumers,” said a local resident. “We are already struggling with high electricity bills.”
As the government continues to navigate the complex power sector, one thing is clear: the cancellation of the IPP contracts is just the beginning of a long process to reform Pakistan’s energy landscape.