Former federal Minister, Dr. Gohar Ejaz, on Monday, shared a proposal to reduce electricity prices by Rs. 14 per unit. He suggested converting contacts of 40 independent power producers to a take-and-pay model where payments are made according to the electricity actually generated.
This initiative is expected to save Pakistani consumers Rs. 1 trillion or Rs. 9.70 per unit. Furthermore, due to this reduction, other charges like distribution taxes are expected to be minimized by Rs. 4 per unit. The total savings could amount to Rs. 14 per unit for all consumers.
The task force has carried out an extensive investigation, analysis, and negotiations with IPPs are presently in towards improvement and advancement, the former Minister further explained the point. The domestic consumers, commercial industries and farmers across Pakistan are enthusiastically expecting this relief in tariffs he claimed.
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The main reasons behind reduction in electricity prices are mentioned below:
One of the main reasons is economic strain. Pakistan has encountered massive financial challenges with high inflation rates and devalued currency. Minimizing electricity costs is considered to be a critical measure to ease economic strain on industries and households.
Secondly, contacts with independent power producers on a take-or-pay basis meant that the government paid for full capacity whether or not electricity was used. Shifting to a take-and-pay model guarantees payments only for produced electricity, minimizing unnecessary expenses.
Thirdly, by renegotiating contacts, the government can be capable of managing the energy supply chain more effectively, which will lead to greater efficiency, reduce waste, and improve energy security.
Fourthly, by reducing electricity costs, it is crucial for social stability, particularly as energy related issues often lead to public dissatisfaction. This move is anticipated to mitigate social unrest and counter-public support.
Fifthly, by improving cost efficiency, the government would be capable of getting better position to explore sustainable energy choices, and it will definitely minimize overdependencies on excessive fossil fuels and improving cleaner energy solutions for the future.