The power division’s request to amend the negotiated settlement agreements with 14 independent power producers (IPPs) in order to lower electricity rates and save Rs1.4 trillion for the national exchequer was accepted by the federal cabinet on Tuesday.
In an effort to save Rs411 billion, the government prematurely ended power purchase agreements with five of the oldest IPPs in October. In December, settlement agreements were reached with eight bagasse-based IPPs with the goal of lowering energy rates and saving the national exchequer some Rs240 billion.
Numerous power sector changes have been implemented by the government, such as renegotiating contracts with IPPs, expediting the Competitive Trading Bilateral Contract Markets, and stopping the supply of gas to captive power plants. These actions are intended to lessen the burden of capacity payments on the government and customers while also halting the expansion of circular debt in the electricity industry.
Today at the PM House, Prime Minister Shehbaz Sharif presided over a meeting of the federal cabinet.
Following consultation with the 14 IPPs under the updated agreements, the cabinet accepted the suggestion to cut their profit and expenses by Rs802 billion. These IPPs would have Rs35 billion taken out of their surplus profits from prior years.
Members of the meeting were informed that, out of the 14, four IPPs were founded under the 1994 Power Policy, and ten operated under the 2002 Power Policy. Additionally, the attendees were informed that a 1994 policy agreement with one IPP had already been canceled.
Participants in the meeting were told that the updated agreements were expected to save the government Rs1.4 trillion over the applicable period, with power users benefitting from yearly savings of Rs137 billion.
The prime minister praised the accomplishment, emphasizing that it will result in huge national savings, lower electricity rates, and less circular debt.
Following the successful revision of the agreements, he expressed gratitude for the work of the task force members, the electricity minister, the adviser, and the secretary.
