Pakistan Secures Rs163 Billion in Energy Savings Through Power Pact Renegotiations

Islamabad – The Economic Coordination Committee (ECC) of the Cabinet approved revised agreements with 14 wind power producers (WPPs) and a solar project in Punjab on Friday, March 7, 2026, a move expected to generate savings of approximately Rs163 billion over the lifespan of the projects. The ECC also approved the disbursement of Rs235 billion in outstanding dues to power producers .

Key Approvals and Savings

The renegotiated contracts, spearheaded by a task force on energy led by Zafar Iqbal, aim to reduce future tariff liabilities. The ECC meeting, presided over by Finance Minister Muhammad Aurangzeb, also approved supplementary grants totaling over Rs10 billion for seven ministries and divisions .

Significant savings are projected from several key revisions:

• Wind Power Plants (2013 Tariff): Three WPPs operating under the 2013 upfront tariff framework agreed to revise their agreements after debt repayment, resulting in an estimated Rs38.9 billion in savings .
• Wind Power Plants (2018 Tariff): Eleven IPPs operating under the 2018 tariff framework agreed to fix the return on equity (RoE) at the exchange rate prevailing on debt repayment expiry, waive late payment interest, and reduce future late payment rates, generating approximately Rs78.6 billion in savings .
• Quaid-i-Azam Solar Power Project: Revisions to the Punjab government’s Quaid-i-Azam Solar Power (Pvt) Ltd project, including fixing the RoE at 13% with an exchange rate of Rs168 per dollar, are expected to yield savings of Rs45.7 billion .

Other Agreements and Approvals

The ECC also approved the termination of a power purchase agreement with Altern Energy Limited, a 29-megawatt plant operating under the 1994 power policy, citing its diminished utility in the current energy market . A waiver of late payment surcharges for government-owned power plants (GPPs) was also granted, despite initial concerns from the Ministry of Finance regarding potential impacts on dividend flows .

the ECC extended the deadline for utilizing Rs1.25 trillion borrowed from banks last year to address circular debt and payables to Independent Power Producers (IPPs) until June 2026 .

Supplementary Grants Approved

In addition to the energy sector agreements, the ECC approved several Technical Supplementary Grants (TSGs), including:

• Rs1.3 billion for the Sustainable Development Goals Achievement Programme (SAP) .
• Rs3 billion for gas supply schemes in villages near gas production fields .
• Rs200 million for the Ministry of Federal Education and Professional Training to cover outstanding teacher payments .
• $4 million (additional) for the Higher Education Commission under the restructured Higher Education Development in Pakistan project .
• Rs3.63 billion for the National Disaster Management Authority (NDMA) to reimburse expenditures related to monsoon response and humanitarian aid .

Looking Ahead

The approved revisions and disbursements are expected to contribute to a more sustainable energy sector in Pakistan and alleviate pressure on the national economy. The Power Division and its entities will now sign revised power purchase agreements and seek tariff adjustments from the National Electric Power Regulatory Authority (NEPRA) .