Major Reform: Pakistan Cancels Old Power Contracts

The government has saved approximately Rs. 3,600 billion by canceling and renegotiating several Independent Power Producer (IPP) contracts that had burdened Pakistan’s energy sector for years. These agreements, signed nearly two decades ago with about 40 private companies, required the government to pay billions annually in capacity charges—even when electricity was not produced. Officials said the contracts drained around Rs. 3.6 trillion from consumers through inflated tariffs and payments to idle plants. The recent cancellations mark a major policy shift toward restoring financial discipline in the power sector. Industrial leaders have urged authorities to identify and hold accountable those responsible for signing such deals, which they say allowed a few private producers to profit massively at the nation’s expense.