Prime Minister Shehbaz Sharif has requested the Ministry of Finance and Ministry of Energy to propose ways to waive capacity charges in electricity bills. The Ministry of Energy has suggested paying off the Rs 4 trillion capacity charges in a single installment to alleviate circular debt and provide immediate relief to consumers. This approach aims to avoid further accumulation of circular debt. The Ministry of Finance, however, has tied this relief to conditions set by the International Monetary Fund (IMF). The proposals are currently under review by PM Sharif, with no final decision made yet.
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For the current fiscal year, capacity payments to Independent Power Producers (IPPs) are estimated at Rs 2,091 billion. This includes:
- Rs 465.7 billion for nuclear plants
- Rs 446.4 billion for hydropower plants
- Rs 395.4 billion for imported coal power plants
- Rs 256 billion for Thar coal power plants
- Rs 168 billion for LNG power plants
- Rs 168 billion for wind power plants
- Rs 81.33 billion for furnace oil power plants
These payments are made in US dollars to ensure the power producers can maintain their capacity to meet additional demand. To address the circular debt issue, the ministries are considering financing options, potentially spreading the payments over three to five years, which could lower electricity prices by Rs 5 per unit.
The final decision on this proposal will depend on further consultations with the IMF.
