Hub Power Company Limited (HUBCO), Pakistan’s largest Independent Power Producer (IPP), has initialled a negotiated settlement agreement with the government. The listed IPP shared the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday morning.

The government later issued a detailed statement outlining its power sector reforms, including termination of the existing agreement with five IPPs including Hubco, later the same day.

“We hereby inform you that upon the request of the Task Force constituted under the Prime Minister’s Office, The Hub Power Company Limited, in the greater national interest, has initialled a negotiated settlement agreement with regard to the accelerated expiry on October 1, 2024 of its relevant agreements scheduled to expire in March 2027, relating to the company’s 1292 MW power generation project located at Mouza Kund, Post office Gaddani, District Lasbella, Baluchistan,” read the notice.

HUBCO highlighted that the power plant achieved COD in 1996.

“Pursuant to the terms of the agreement, GOP and CPPAG have agreed to settle the company’s outstanding receivables up till October 1, 2024. The Board has agreed to the terms of the settlement and authorised the execution of a definitive agreement in respect thereof,” it added.

The development comes as the government seeks to renegotiate or scrap contracts with IPPs in a bid to address financial challenges and streamline the power sector.

Earlier, Lalpir Power Limited, another listed IPP, informed that its Board of Directors (BoD) will place the proposed terms for early termination of company’s agreements with the government before the shareholders for approval in the coming days.

Business Recorder on Tuesday reported that the federal government’s work on different IPPs has started delivering results as four IPPs, M/s Atlas Power, M/s Saba Power, M/s Rousch Power and Lalpir Power have initialled (signed) premature scrapping of pacts whereas Hubco is likely to follow suit on Tuesday or Wednesday.

As per the report, the Task Force on Power Sector, which also comprises two senior security officers besides lawyers on the board and experts from SECP, PPIB, CPPA-G and Nepra played a key role in convincing IPPs, established under pre-1994, 1994 and 2002 Power Generation Policies to renegotiate.

It informed that three IPPs Hubco Power, Rousch Power and Lalpir Power, fought till the end but ultimately showed leniency on premature termination of Power Purchase Agreements (PPAs).

However, there were differences between Hubco and the government team on amount of Rs1 billion, it reported.