ISLAMABAD – Independent Power Producers (IPPs) have signed initial documents to terminate their power purchase agreements.
These IPPs would no longer receive capacity payments.
According to the media reports, this move will save a colossal sum of PKR 300 billion over the next 3 to 10 years from these agreements.
However, past expenses for capacity charges and electricity costs would still be paid.
More importantly, the five IPPs have also waived off Rs40 billion in interest payments. Once the federal government approves the next steps, these five IPPs, which were established under the 1994 and 2002 agreements, have formally signed the official termination documents.
The companies that have signed these agreements include Hub Power, Rousch Power, AES Lal Pir Power, Saba Power Plant, and Atlas Power.
As a result, after the termination of contracts with these five IPPs, 2,400 MW of electricity would no longer be part of the system, as NTDC has also refused to purchase electricity from them under the take-and-pay mechanism.
This would provide the government with relief of PKR 0.65 per unit of electricity, amounting to an annual savings of PKR 65 billion.
A task force official further stated that negotiations would begin next week with 18 more IPPs, whose combined capacity is 4,267 MW.
These IPPs were also established under the 1994 and 2002 power policies, and would now sell electricity under the take-and-pay model, meaning they would be paid only for the electricity supplied, without receiving capacity payments, unlike the current contract under the “take or pay” mechanism.
