The talks between the Independent Power Producers (IPPs) and the government have been concluded and the two parties are expected to sign the Memorandums of Understanding (MoUs) today, informed sources said Tuesday.
The government had earlier struck a new deal with IPPs in a bid to bring down the cost of electricity generation and reduce the circular debt.
Sources said the government team, headed by Babar Yaqoob Fateh Mohammad, will present a final report regarding the talks to the cabinet on August 31.
The MoUs will be presented before the cabinet, and after getting approval, the relevant departments will sign the deals with the IPPs.
Sources said the government hopes to save Rs675 billion in the next seven to ten years.
It is expected that up to Rs5,000 billion will be saved in the next 20 to 25 years if the new rules are also applied to the government-owned, coal-based and gas-fired power plants.
The talks were held on the policies finalised in 1994, 2002 and 2006, sources said.
As per the details, the profit to the local investors will be paid in the local currency, however, the foreign investors will be paid in dollars but their profit margin has been cut down by 3% to 12%.
Also read: Details emerge of govt-IPP agreement to boost industrial sector
The IPPs will be paid on the basis of the number of units sold as previously they were paid according to their generation capacity.
It has been decided that a heat test will be carried out to ascertain their capacity. The government will also layout a mechanism for payments to the IPPS.
The interest rate over late payment decreased from 4.5% to 2.5% for two months.
In case of tax evasion or any other irregularity, the concerned authorities would be free to investigate the matter, sources further added.
Power tariff to reduce
Earlier this month, Prime Minister Imran Khan had congratulated the nation on the singing of the agreement with IPPs and said Pakistan had turned the corner and now ample job opportunities would be available to the people.
According to The News, PM Imran said he wanted to share the good news that as a result of an agreement with the IPPs, the power tariff will come reduce for industries and household users will also benefit.
He noted that negotiations with the IPPs were underway for the last many days and now with an agreement in place, it would help decrease the circular debt. He said the government is reforming the loss-making power sector.