Govt and 17 IPPs Reach Agreement on Hybrid ‘Take and Pay’ Model

The federal government’s task force on energy and 17 Independent Power Producers (IPPs) under the 1994 and 2002 power policies have reached an agreement on a hybrid ‘take and pay’ model. The agreement is expected to save the government Rs. 200-300 billion but still requires Cabinet approval before being implemented, reported Business Recorder. Nishat Chunian Power Limited (NCPL) confirmed it has signed the agreement after informing the Pakistan Stock Exchange on Wednesday that it had agreed to revise its Power Purchase Agreement (PPA) and Implementation Agreement (IA) to align with the new model effective from November 1, 2024. The amendments include changes in the tariff structure, cost components, and insurance premiums, as well as the withdrawal of arbitration claims. The task force aims to revise PPAs with around 30 IPPs, including those from the 1994, 2002, and pre-1994 policies. The government expects a reduction in power tariffs by Rs. 3.50 per unit and potentially further reductions of up to Rs. 6.50 per unit if Chinese IPPs agree to debt re-profiling. The next phase of negotiations will involve government-owned power plants and renewable energy projects.