PM Shehbaz approves revised 10-year power policy, halves electricity purchases to cut costs

Prime Minister Shehbaz Sharif has approved a revised national electricity procurement policy, slashing planned power purchases over the next decade from 14,000 megawatts (MW) to approximately 7,000MW.

The move aims to reduce reliance on costly long-term contracts and promote a market-driven energy sector.

Chairing a high-level meeting to review the Integrated Generation Capacity Expansion Plan (IGCEP) 2024–2034, the prime minister reaffirmed the government’s commitment to lowering electricity tariffs and implementing long-term, sustainable reforms in the energy sector.

“Following major tariff reductions to ease the burden on citizens, we are now moving forward with a comprehensive reform strategy for the energy sector,” PM Shehbaz said. He emphasized the urgent need to complete strategic initiatives like the Diamer Bhasha Dam, underscoring that delays in energy projects would not be tolerated. “We are on track to introduce a competitive electricity market in Pakistan, which will help drive down power costs even further,” he added.

The Prime Minister’s Office stated that the IGCEP was re-evaluated under Shehbaz’s direction, leading to significant revisions to better align with current realities and future energy needs. The updated plan, developed by the Ministry of Energy, eliminates costly projects totaling 7,967MW—yielding estimated savings of $17 billion (Rs4.743 trillion).

Key features of the revised policy include the introduction of competitive bidding for new power projects and a shift toward utilizing indigenous resources such as solar, nuclear, and hydropower—reducing dependence on imported fuels and preserving foreign exchange reserves.

The reforms also aim to gradually phase out capacity payments to power producers, a long-standing financial burden on the sector.

Praising the efforts of Federal Minister for Power Sardar Awais Leghari and his team, PM Shehbaz hailed the reforms as a “historic success” for the country.

The meeting was attended by several key figures, including the power minister, Minister for Economic Affairs Ahad Khan Cheema, Minister for Information Attaullah Tarar, Minister for Petroleum Ali Pervaiz Malik, and senior officials from relevant departments.

In a separate statement, Power Minister Awais Leghari said the government’s decision to cancel 7,000MW of planned power purchases is expected to save Rs4.743 trillion and ease financial pressure on households and businesses.

Leghari announced that the government will move away from the “single buyer” model of electricity procurement. “Future transactions will take place in competitive markets to enhance transparency and efficiency,” he said.

He also emphasized that these structural reforms are even more crucial than ongoing negotiations with Independent Power Producers (IPPs), noting that the overhaul reflects a broader commitment to public welfare and fiscal responsibility.