Five IPPs ‘agree’ to terminate power purchase contracts

ISLAMABAD: Following the government’s efforts, five independent power producers (IPPs) have “agreed” to terminate their Power Purchase Agreements (PPAs).

Local publication, citing power division sources, reported that all five IPPs would sign the documents after some modalities are settled and agreements are finalized.

As per the agreement, these IPPs would be paid their outstanding dues but only the cost of electricity without any interest or future payments. The past capacity payments that the government owes to the IPPs amounting to Rs 80-100 billion are being negotiated, the official said.

As per details, four of the agreed IPPs were set up under 1994 power policies and one under 2002 policies. “After the termination of the contracts, the five IPPs would not be allowed to be functional on a take-and-pay basis,” the official said.

The agreement would save the government Rs300 billion in the next 3-10 years which will provide relief to the consumers of Rs0.60 per unit equal to Rs60 billion in one year.

The publication, citing power sector officials, also reported that the government has identified 17 more IPPs installed under 1994 and 2002 policies. These IPPs would switch over to the take-and-pay mode from the take-or-pay mechanism till the private power market is established.