Federal Cabinet Approves Key Economic and Structural Reforms to Save Billions
On Tuesday, the federal cabinet approved several significant reforms aimed at reducing electricity costs and streamlining government operations. These reforms are expected to yield substantial savings for the national exchequer, benefiting the country’s fiscal position.
Revised Agreements with Independent Power Producers (IPPs)
The cabinet approved a recommendation from the power division to revise agreements with 14 Independent Power Producers (IPPs) in a bid to cut electricity costs and save Rs. 1.4 trillion over time. The revised agreements will result in a reduction of Rs. 802 billion in profits and costs for the IPPs, along with the deduction of Rs. 35 billion in excess profits from previous years. These IPPs operate under the 2002 and 1994 Power Policies, and the revised agreements will save the government an estimated Rs. 137 billion annually. Prime Minister Shehbaz Sharif praised the achievement, stating that the move would reduce circular debt, lower electricity prices, and lead to significant national savings.
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Government Restructuring for Cost Savings
In line with its right-sizing initiative, the cabinet also approved the merger of the Ministry of Narcotics Control into the Ministry of Interior, which is expected to save Rs. 183.25 million annually in administrative and operational expenses. Additionally, the Aviation Division will be merged with the Ministry of Defence, a move that will save Rs. 145 million annually. This restructuring follows the government’s austerity policy and is aimed at improving airspace management, as civil aviation affairs were previously under the Ministry of Defence until 2013.
Public Procurement and Human Rights Reforms
The cabinet also approved the inclusion of a new Section 45-A in the Public Procurement Rules, 2004, allowing procuring agencies to delegate procurement tasks to other agencies. Furthermore, the Ministry of Human Rights’ recommendation to send the National Commission for Minorities Act 2024 to Parliament for approval was endorsed.
Additionally, the cabinet approved the extension of Dr. Muhammad Bashir’s contract as a Technical Member of the Environmental Tribunal in Islamabad for an additional two years.
These decisions mark an important step towards improving fiscal health and operational efficiency in Pakistan’s government, with an emphasis on austerity and strategic cost-cutting.
