Five IPPs Decide to Terminate Their Contracts With Government

ISLAMABAD: Five Independent Power Producers (IPPs) have reached an agreement to terminate their Power Purchase Agreements (PPAs) with the government.

Once finalized, these IPPs will cease operations under their existing contracts. According to a national daily, they will be compensated for their outstanding dues but will only receive the cost of electricity without any interest or future payments.

Additionally, the government is negotiating past capacity payments amounting to approximately Rs. 80-100 billion.

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IPPs established on a Build, Operate, Own, and Transfer (BOOT) basis will be transferred to the government, whereas those not under BOOT will remain with their current owners. This termination is expected to save the government Rs. 300 billion in capacity payments over the next 3 to 10 years and provide an annual relief of Rs. 60 billion to consumers.

The government has identified 17 more IPPs that will transition from the 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 operational, these IPPs will be allowed to sell electricity directly to clients using reduced wheeling charges.

The task force is also focusing on reducing tariffs for wind and solar power plants. Currently, some solar plants are charging Rs. 27 per unit, and wind IPPs are charging Rs. 40 per unit.

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