Punjab to fund its new tariff cut with power plants’ profit

A day after its decision to reduce power tariffs to provide relief in electricity bills, the Punjab government on Wednesday said the relief will be financed with billions in profits hitherto harvested by two government-owned power companies, the Quaid-e-Azam Thermal Power Private Limited and Punjab Thermal Power Private Limited. The provincial cabinet had decided to cut the power tariffs of these two plants by 30-40 per cent to reduce electricity bills. This move is similar to the federal government’s, which recently renegotiated contracts with independent power plants (IPPs) to reduce tariffs. The provincial government said that both power companies would not make a profit or withdraw savings, and the amount would be diverted towards public relief. The two state-owned entities had been making between Rs12 to Rs13 billion in profit, which they would now forgo.