Govt Readies Stricter Power Purchase Agreements for 18 IPPs

The federal government is finalizing four new options to shift 18 Independent Power Producers (IPPs) from ‘take or pay’ to a ‘take and pay’ model, with notices expected next week. These IPPs have been informed of the planned contract changes, reported Business Recorder. The Central Power Purchasing Agency (CPPA) has halted payments to these IPPs, which have a combined capacity of 4,267 MW. Some IPPs have expressed willingness to revise their contracts in the interest of resolving Pakistan’s ongoing power sector crisis. Others have resisted over reasons that there was a need for fair negotiations to avoid deterring future investments. The government is aiming to finalize agreements and resolve the situation soon, with due capacity payments of roughly Rs. 72 billion to five IPPs already agreed upon. The revised agreements may help stabilize the power sector and ensure sustainable investment going forward. However, it is unclear if these revisions would reduce electricity rates for the end consumer.