ISLAMABAD: The government is expected to commence summoning top bosses of 18 Independent Power Producers (IPPs), established under Power Generation Policies, 1994 and 2002 next week, to place available options for conversion of their plants from ‘take or pay’ to ‘take and pay’ mode, well-informed sources told Business Recorder.
The government has claimed savings of Rs 411 billion to the national exchequer by terminating the Power Purchase Agreements (PPAs) of five IPPs. The cabinet approved termination of the PPAs and final settlement agreement on October 10, 2024 but the final documents have not yet been signed.
The IPPs, which are to be converted to take and pay mode, have already finalised their internal work on the possible financial impact and the position they will take during meetings with the Task Force headed by the Minister for Power but in reality, some other key personnel are dealing the cards.
‘Take and pay’ mode: Govt tailors four customised options for 18 IPPs
The expiry date of PPAs of some IPPs targeted to be shifted to take and pay mode, after ‘mutual and honourable consultation’ is over 15 years.
Of Rs 8-10 per unit short-term relief in tariff, financial impact of negotiations with different plants will be Rs 3 to Rs 3.50 per unit, re-profiling impact will be Rs 3.75 per unit, impact of waiver from electricity duty which is provincial levy will be Rs 0.65 per unit, PTV Free Rs. 0.16 per unit, and some relief in reduction in sales tax and income tax.
According to Power Minister Sardar Awais Ahmad Khan Leghari impact of reduction in Return on Equity (RoE) and profit of the government’s own power plants will be up to Rs 1.50 per unit.
The details of IPPs of 2002 Policy and their PPAs expiry dates are as follows:
(i) Engro Powergen 215.516 MW, remaining term 10.6 years;
(ii) Foundation Power Company Daharki Ltd, 173.772 MW, remaining term 11.8 years ;
(iii) Uch-II Power (Pvt.) Limited 359.34 MW, remaining term 14.7 years;
(iv) Halmore Power Generation Company Limited 200.021 MW 17.6 years;
(v) Orient Power Company (private limited) 208.453 MW, remaining term 16.4 years;
(vi) Saif Power Limited, 204.369 MW, remaining term 15.8 years;
(vii) Saphir Electric Company Limited, 206.48 MW, remaining term 16.3 years ;
(viii) Liberty Power Tech Limited 196. 139 MW, remaining 9.6 MW years ;
(ix) Hubco Narowal Energy Limited 213.82 MW, remaining life 11.9 MW;
(x) Attock Gen Limited 156.181 MW, remaining life 9.6 MW;
(xi) Nishat Chunian Power Limited, 196.722 MW, remaining term, 11.2 years ;
(xii) Nishat Power Limited 195.305 MW, 11 years;
(xiii) New Bong Laraib hydro) 84 MW reaming term 14 years;
(xiv) Uch-II Power 404 MW, remaining term six years ;
(xv) Fauji Kabirwala 170 MW, remaining six years ;
(xvi) Kohinoor Energy, 124 MW, remaining life, three years ;
(xvii) Pakgen Power 365 MW, remaining term four years; and
(xviii) and Liberty Daharki Power 235 MW, remaining term two years .
The agreements of those IPPs which were established under Power Generation Policy 2002 will have an impact of Rs 1.50 per unit.
On October 10, 2024, while approving termination of five IPPs contracts, Prime Minister Shehbaz Sharif said that it was the outcome of the strenuous collective efforts of the entire government’s team. He also recognized the input and support of allied parties in this regard and mentioned Chief of Army Staff General Asim Munir, who took a personal interest in the whole matter. Prime Minister described the development as a beginning of a journey which, he said, will be converted into progress and prosperity of the people.
Copyright Business Recorder, 2024
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