Awais Leghari shares plan to make electricity very cheap in Pakistan

Leghari told the conference that the government has formally walked away from the IPP business model, describing the arrangement as effectively finished for the foreseeable future.

Federal Minister for Energy Awais Leghari outlined the government’s vision at a conference in Lahore on Monday, speaking via video link to an audience of energy sector stakeholders. His remarks signalled a decisive break from the Independent Power Producer framework that has long defined Pakistan’s power generation model and drawn sustained criticism for burdening consumers with high capacity payments.

Leghari told the conference that the government has formally walked away from the IPP business model, describing the arrangement as effectively finished for the foreseeable future. He said authorities had cancelled plans to add a further 10,000 megawatts of generation capacity through such agreements, a move that reflects growing official frustration with a system critics say prioritised guaranteed returns for private producers over affordability for ordinary households.

“IPPs have been buried for the future,” Leghari said, in remarks that marked one of the most direct repudiations of the model by a sitting energy minister.

The minister said the government now intends to pursue a different path, one centred on privatisation of electricity distribution companies, the rapid rollout of smart metering technology, and the creation of conditions that attract private companies to introduce newer energy solutions at competitive prices.

On tariffs, Leghari said the government plans to restructure electricity pricing so that industrial consumers and the agricultural sector face rates that reflect when and how they consume power. He said off-peak daytime rates for certain consumer categories could fall to between six and seven rupees per unit, a figure that, if realised, would represent a substantial reduction from current levels and one that he said would eventually make battery storage a practical option for Pakistani households.

The prospect of consumers storing cheap daytime electricity for evening use remains aspirational at present, given that battery storage technology carries significant upfront costs that most Pakistani households cannot absorb. However, Leghari’s framing of the goal suggests the government wants to position Pakistan’s grid reforms within a broader global shift toward decentralised, storage-enabled electricity consumption.

Leghari also turned his attention to billing irregularities, a longstanding source of friction between electricity distribution companies and their customers. He said the government intends to eliminate the problem of faulty electricity meters remaining active for extended periods, a practice that he said generates unjustified financial pressure on consumers who end up paying for inaccurate readings. The minister said the government is working to ensure that defective meters are identified and replaced quickly rather than left in service.

On procurement, Leghari said the government has achieved savings in how it buys electricity meters, though he offered no specific figures. Procurement reform has featured prominently in Pakistan’s broader public sector efficiency drive, and the energy sector has faced particular scrutiny over past contracts that auditors and parliamentary committees have questioned on value-for-money grounds.

The centrepiece of the structural reforms Leghari described is the planned privatisation of electricity distribution companies. He said the government expects to complete the transfer of these companies to private ownership within one to two years. Distribution companies, known locally as DISCOs, have accumulated significant losses over recent years and have faced repeated criticism over technical and commercial losses, poor maintenance and inconsistent service delivery across urban and rural areas.

Pakistan’s electricity sector has sat at the centre of the country’s broader economic difficulties for much of the past decade. Circular debt, the term used to describe the accumulating unpaid obligations between power producers, distributors and the government, has grown to several trillion rupees and represents one of the most persistent structural problems the government faces. Analysts have said that without meaningful reform of both the generation and distribution sides of the sector, the circular debt problem will continue to worsen regardless of tariff adjustments.

The government’s decision to step back from new IPP agreements reflects pressure from the International Monetary Fund, which has made energy sector reform a condition of the bailout programme Pakistan is currently implementing. The IMF has pointed to capacity payments owed to IPPs as a key driver of high electricity costs and has urged Islamabad to renegotiate existing contracts and avoid adding new ones on similar terms.

Leghari’s announcement at the Lahore conference follows a series of meetings between Pakistani officials and power sector stakeholders over recent months, during which the government has sought to build consensus around its reform agenda. Whether the timeline he outlined for privatisation and tariff restructuring proves achievable will depend on factors including the pace of negotiations with distribution company employees, regulatory approvals and investor appetite for assets that carry substantial inherited liabilities.

For ordinary consumers, the immediate question is whether the reforms Leghari outlined will translate into lower bills in the near term. Electricity prices in Pakistan have risen steeply over the past two years as the government passed on fuel costs, capacity charges and currency depreciation to end users under IMF programme conditions. Many households and small businesses have said the increases have become unmanageable, and the political pressure on the government to deliver visible relief is considerable.

Leghari’s remarks represent the most detailed public account yet of how the government intends to approach that challenge, even as the structural complexity of Pakistan’s power sector means that the path from announcement to delivered savings remains long.