Power Sector Overhaul, Major Electricity Tariff Cuts by June 2025

A notable reduction in electricity tariffs for both industrial and residential consumers is anticipated by June 2025, as shared by Secretary of the Power Division, Dr. Fakhre Alam Irfan. This announcement was made during a meeting of the Senate Standing Committee on Power, where officials deliberated on the savings achieved from renegotiated or canceled contracts with Independent Power Producers (IPPs).

Dr. Irfan revealed that the government has evaluated the effects of net-metering and off-grid consumers and is implementing several measures to bring down electricity tariffs. He further stated that a significant overhaul of the power sector is in progress, which includes the separation of energy purchasing duties from the Central Power Purchasing Agency-Guaranteed (CPPA-G) and the introduction of a revamped market operation system.

Senator Mohsin Aziz pointed out that the government is actively restructuring the National Transmission and Dispatch Company (NTDC) and creating new positions for emerging entities.

Dr. Irfan elaborated that the newly formed Independent System Market Operator (ISMO) will supervise system operations by merging the market functions of CPPA-G with those of the National Power Control Centre (NPCC) within NTDC.

The Secretary reassured that the restructuring plan has been carefully designed to ensure that NTDC employees will not face job insecurities. He assured the committee that lessons learned from WAPDA's unbundling process had been incorporated to align with global best practices.

Senator Syed Shibli Faraz raised concerns about NTDC's prolonged leadership void, questioning how the company could function efficiently without a permanent head. He stressed the importance of synchronized transmission planning alongside power plant installations to optimize capacity payments.

The committee engaged in discussions regarding the restructuring's potential to improve the energy sector's efficiency or add more complexity. While Dr. Irfan clarified that ISMO's role would be to facilitate the market rather than purchasing energy, committee members emphasized the need for long-term strategic planning to evaluate the implications of these new projects.