By Staff Reporter
ISLAMABAD: The cabinet approved the termination of five independent power producer (IPP) agreements on Thursday, scrapping “take-or-pay” contracts that would expected to save the country Rs411 billion
“Five IPPs, with mutual consent and prioritizing national interests over personal, have reached an agreement on power purchase contracts,” Prime Minister Shehbaz Sharif said. “Today onwards, the ‘take or pay’ contracts with these five IPPs have been completely terminated.”
The terminated agreements include those with Hubco, Lalpir Power Limited, Saba Power, Rousch Power, and Atlas Power, the Prime Minister’s Office said in a statement. The details of the agreement between the Task Force and the IPP owners were presented to the cabinet for approval.
“These five IPPs have played a key role in initiating public relief, like the first drop of rain,” the Prime Minister said. “I, along with the entire cabinet, am grateful to these IPP owners.”
Rousch Power, established under a Build-Operate-Transfer (BOT) agreement, will be privatized through the Privatization Commission after ownership transfer to the government. The remaining four IPPs will retain ownership.
Sharif said only the outstanding amounts owed to these IPPs would be paid, without any interest. “Further revisions of agreements with other IPPs in the power sector will gradually reduce tariffs… This move will benefit electricity consumers to the tune of Rs60 billion annually, reducing per-unit electricity costs, and saving the national treasury Rs411 billion overall.”
Hubco earlier on Thursday also informed its stakeholders that the company reached a ‘negotiated settlement’ with the government for early termination of power agreements.
The government and market operator, the Central Power Purchasing Agency (CPPA), agreed to settle the company’s outstanding receivables up to October 1, the company told the Pakistan Stock Exchange in a notice.
It said its board approved an accelerated expiry date of October 1 for the deal, instead of an initial date of March 2027, in an action taken “in the greater national interest”.
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