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Five IPPs to Terminate Their Contracts with Govt

Islamabad (TDI): As many as five Independent Power Producers (IPPs) have reached an agreement with the government to terminate their Power Purchase Agreements (PPAs), as per media reports.

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.

Read More: IPPs update Military Leaders on Power Sector issues

The government is also negotiating the past capacity payments of around Rs80 to 100 billion.

As soon as their dues are clear, the IPPs set up under the Build, Operate, Own, and Transfer (BOOT) model will be handed over to the government. Those not under BOOT will remain with their current owners.

This move is likely to save the government Rs300 billion in capacity payments over the next 3 to 10 years, offering Rs60 billion in annual relief to consumers.

Read More: Why Renewable Energy Is the Answer to Pakistan’s Energy Crisis?

Additionally, the government has identified 17 more IPPs that will shift from take-or-pay to take-and-pay mode. These IPPs will continue supplying electricity to the government until a private power market is established.

Once the market is functional, they will sell power directly to clients with reduced wheeling charges. The task force is also working to lower tariffs for wind and solar power plants, with some solar plants currently charging Rs27 per unit and wind IPPs charging Rs40 per unit.

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