Agreements’ revision with other IPPs to gradually lower tariffs
Prime Minister Shehbaz Sharif said on Thursday that five independent power producers have “voluntarily” agreed to cancel their power purchase agreements with the federal government, providing Rs60 billion in annual relief to inflation-hit consumers, following extended talks with the authorities.
“By voluntarily agreeing to terminate their contracts with the government, these five IPPs prioritised the nation’s interests over their own. The take and pay system has ended for them,” the premier said addressing the Cabinet.
The federal government has been under immense pressure to reconsider its power purchase agreements with the IPPs following outcry across the country as the addition of capacity payment charges inflated the power bills beyond the affordability of the inflation-burdened masses.
The PM said that in the first phase, five IPPs were ending deals with the government; however, revision of PPAs with other IPPs would gradually lower the tariff further, saving the national exchequer Rs411 billion a year, creating more fiscal space for the cash-strapped country.
PM Shehbaz said: “The rate of inflation was more than 30% [in the same month during the previous year], it now stands at 6.9%.”
The prime minister commended the five IPPs, stating they were the first raindrops in the effort to bring relief to the public.
