The federal government’s task force on energy has reached an agreement with 17 Independent Power Producers (IPPs) operating under the 1994 and 2002 power policies to implement a hybrid ‘take and pay’ model. The agreement, which is expected to save the government Rs. 200-300 billion, is now awaiting Cabinet approval for implementation, according to Business Recorder.
Nishat Chunian Power Limited (NCPL) confirmed its participation in the agreement, announcing on Wednesday that it had revised its Power Purchase Agreement (PPA) and Implementation Agreement (IA) to align with the new model, effective November 1, 2024. The amendments include changes to the tariff structure, cost components, and insurance premiums, along with the withdrawal of arbitration claims.
The task force plans to renegotiate PPAs with approximately 30 IPPs, including those established under the 1994, 2002, and pre-1994 power policies. The government anticipates a reduction in power tariffs by Rs. 3.50 per unit, with the potential for further cuts of up to Rs. 6.50 per unit if Chinese IPPs agree to debt re-profiling.
The agreement marks a significant step in the government’s efforts to reduce the financial burden of power generation on the national economy. The next phase of negotiations will focus on government-owned power plants and renewable energy projects, aiming to further streamline the energy sector and lower electricity costs for consumers.
