Govt Likely to Sign New Agreement With 18 IPPs in Two Weeks

The federal government is expected to sign the new agreement with 18 Independent Power Producers (IPPs) within the next two weeks. The new terms will shift them to a mandatory ‘take-and-pay’ model for electricity purchase. The new agreement will potentially save the government between Rs. 70-100 billion annually. Payments to the IPPs will be based solely on actual electricity dispatched and eliminate capacity payments. The government will settle outstanding dues related to energy and capacity payments through cash or T-bills, excluding interest payments. Additionally, the government will cover annual operation and maintenance costs to ensure the plants remain operational. This new arrangement will continue until a private power market is developed. Once this agreement with IPPs is secured, the government plans to extend the “take-and-pay” model to its own power plants, including LNG, nuclear, and hydropower projects, under the guidance and facilitation of the Task Force on Power.