Pakistan aims to save Rs 836bn after renewed agreements with IPPs

Pakistan eyes to save Rs 836 billion after signing a new accord with Independent Power Producers (IPPs), informed Information Minister Shibli Faraz.

The government, he said, held negotiations with the power companies to find ways to reduce the circular debt of more than Rs 2 trillion without compromising on anything. The new accord would save the government Rs 836 billion over the next 20 years, he added.

The minister said the circular debt included Rs 600 billion owed to independent power producers and Rs 700 billion to the public sector generation companies.

Last year the capacity payments were of Rs 650 billion and this year the same were of Rs 850 billion due to expensive oversupply of power, he added.

Shibli said the cabinet approved the recommendations of its committee on electricity. The previous regimes had signed expensive electricity agreements with the power companies and the present government could not revoke them as it would have dented the confidence of investors, he noted.

The prime minister, he said, strictly instructed that there should not be any unannounced loadshedding in the country.

Earlier, Finance Minister Hafeez Shaikh has said that "there is a lot of focus on the power sector." Many steps are being taken for the power sector. The impact of the measures on the energy sector will come in 9 to 12 months.

“In the past, energy agreements were made in dollars. A new agreement is going to be signed with IPPs. The new agreement of IPPs will be approved by the cabinet in 10 days. The new agreement of IPPs will benefit Rs 800 billion,” said Shaikh.

The finance minister said that the new agreement of IPPs would provide benefit to the tune of Rs 800 billion. IPPs are going to be given Rs 450 billion in past bills. Rs 450 billion will be given to IPPs in two installments. 40% of the amount will be given to IPPs immediately. The remaining 60% will be given to IPPs in August.