The government is preparing to offer a new ‘take and pay’ model to 18 Independent Power Producers (IPPs) established under the Power Generation Policies of 1994 and 2002. According to reports, four options have been tailored for these IPPs, with final touches expected by the end of the week. Notices are likely to be issued next week.
The Central Power Purchasing Agency-Guaranteed (CPPA-G) has halted payments to these IPPs, which have a combined capacity of 4,267 MW, as negotiations begin to transition their contracts from the current ‘take or pay’ model to ‘take and pay.’, reported Business Recorder. This move is reportedly linked to prioritizing payments to Chinese IPPs, a topic expected to be central in upcoming bilateral discussions between the Prime Ministers of Pakistan and China.
According to the PPIB’s website, the individual capacity of each IPP, with whom negotiation is to start is as follows Uch-I Power Limited of 586 MWs( COD, October 18, 2000) Pakgen Power Limited of 365 MWs( COD, February 1, 1998), Liberty Power Daharki Ltd 235 MWs (COD September 10, 2001), Kohinoor Energy 131 MWs (COD, June 20, 1997), Fauji Kabirwala Power Company Limited 157 MWs (COD October 21, 1999), Attock Gen Limited (165 MWs)(COD, March 17, 2009), Engro Power Gen Qadirpur Limited 227 MWs( March 27, 2010), Foundation Power (Daharki) of 185 MWs( COD May 16, 2011), Halmore Power Generation Company 225 MWs (COD June 25, 2011), Liberty Power Tech Limited 200 MWs (COD, January 13, 2011, Hubco Narowal Energy Tech Limited 220 MWs(COD April 22, 2011), Nishat Chunian Power Limited 200 MWs (COD, July 21,2010, Nishat Power Limited 200 MWs (COD, June 9, 2010), Orient Power Company 229 MWs (COD May 24, 2010, Saif Power Limited 229 MWs( COD, April 27, 2010), Saphire Power Limited 225 MW(COD October 5, 2010) the first hydropower project i.e. New Bong Hydel IPP 84 MW of Laraib Energy Limited, (COD, March 03, 2013 and Uch-II Power Project of 404 MWs(COD April 4, 2014).
The IPPs involved include major players such as Uch-I Power Limited, Pakgen Power Limited, and Liberty Power Daharki Ltd, among others. Some IPPs have already consented to contract revisions, acknowledging the need to address the ongoing power sector crisis in a fair and transparent manner.
Recent media debates suggested pressure on five IPPs for early contract termination without compensation, citing their substantial profits. However, it was later agreed that such actions could deter future investments. Consequently, a more collaborative approach was adopted to negotiate contract deviations and reach a mutually beneficial solution.
The government has agreed to settle due capacity payments, excluding Late Payment Surcharges, for five IPPs, despite some not generating power in the past year. These settlements total Rs 72 billion, with Hub Power Company receiving Rs 36.5 billion, Rousch Power Rs 15.5 billion, Lalpir Power Company Rs 12.8 billion, Atlas Power Limited Rs 6 billion, and Saba Power Rs 1 billion.
The termination of contracts was initially set to begin on October 1, 2024. However, the owners of the five IPPs have declined to attend the signing ceremony for settlement agreements at the Prime Minister’s House, indicating ongoing negotiations and discussions.
