Islamabad (TDI): Several Independent Power Producers (IPPs) have expressed their concerns over unfair terms of renegotiations offered by the government and sought intervention from Prime Minister Shehbaz Sharif.
As per reports, as many as ten IPPs, including Pakgen Power, Nishat Power, and Hubco Narowal, have approached Prime Minister Shehbaz Sharif in a bid to pressure the government.
Read More: IPPs update Military Leaders on Power Sector issues
According to media reports, the IPPs have highlighted a significant discrepancy in power pricing. They argued that while the average cost to generate electricity is approximately Rs 27 per kilowatt-hour (kWh), consumers are charged over Rs 60/kWh, primarily due to additional non-generation costs.
The IPPs have pointed out several factors, such as currency fluctuation, decreased demand, and capacity payment, etc., are contributing to these elevated costs.
The IPPs argue that the government’s blame on their capacity payments for high tariffs is unjust.
The IPPs are resisting the shift from “Take or Pay” to “Take and Pay” contracts.
Under “Take or Pay”, IPPs are assured payment for available capacity, regardless of actual power usage. The proposed change would mean IPPs would only get paid for the electricity they sell, potentially leaving them to manage fixed costs without the previous revenue guarantee from the government.
Read More: IPPs update Military Leaders on Power Sector issues
Over negotiations’ failure, they urged the prime minister to end their contracts under the 2002 Generation Policy.
Earlier this month, five Independent Power Producers had reached an agreement with the government to terminate their Power Purchase Agreements (PPAs).
Under this arrangement, the IPPS will stop producing electricity as soon as their agreements are finalized. In return, the IPPs will get their outstanding dues but only the cost of electricity without any interest or future payments.
