5 IPPs start process of contract termination

• Official says previous capacity payments, electricity cost to be paid. 
• IPPs to terminate contracts once federal cabinet gives go ahead. 
• Government to get relief in power tariff by Re0.65 per unit: official

ISLAMABAD: Under the latest scenario, five Independent Power Producers (IPPs) on Tuesday initialed documents for termination of their power purchase agreements (PPAs).

“The said IPPs would not be paid future capacity payments saving an amount of over Rs300 billion in the remaining period of 3-10 years of their contracts,” a senior official, who is a part of the Task Force on Power, told The News.

However, previous capacity payments and cost of electricity would be paid. More importantly, interest of Rs40 billion has been waived off by the five IPPs. 

"Once the federal cabinet gives a go-ahead, the five IPPs (four set up under 1994 and one under 2002 power policies) — M/s Hubco Power, M/s Rousch Power, AES Lalpir Power, Saba Power Plant and Atlas Power — would formally sign the official document heralding the termination of contracts. Also 2,400 MWs of electricity after termination of contracts would be no more part of the system as the NTDC has also refused to purchase electricity from them on take and pay mode." 

The government, in return, will get relief in power tariff by Re0.65 per unit (Rs65 billion relief per annum) in the wake of the termination of five contracts.

Now the Task Force on Power, the official said, would initiate from the next week, talks with 18 more IPPs having cumulative capacity to generate electricity of 4,267 MWs set up under 1994 and 2002 power policies for putting them on take-and-pay mode, meaning that the government would pay for electricity it would purchase from them and they would not be paid the capacity payments. 

Currently, they were operating under the existing contracts based on take-or-pay mode.

The task force has identified 18 IPPs with which talks would be held for bringing them on 'take and pay' mode. The task force would also start parleys with the government power plants (GPPs) and they would be treated like IPPs meaning that they would also be brought under take-and-pay mode. 

However, they would be paid enough to make them operational.

The 18 IPPs that would be made operational now under take-and-pay mode are: Uch-I Power Limited of 586 MWs, Pakgen Power Limited of 365 MWs, Liberty Power Daharki Ltd 235 MWs, Kohinoor Energy 131 MWs, Fauji Kabirwala Power Company Limited 157 MWs, Attock Gen Limited (165 MWs), Engro Power Gen QadirPur Limited 227 MWs, Foundation Power (Daharki) of 185 MWs, Halmore Power Generation Company 225 MWs, Liberty Power Tech Limited 200 MWs, Liberty Power Tech Limited 225 MWs, Narowal Energy Tech Limited 220 MWs, Nishat Chunian Power Limited 200 MWs, Nishat Power Limited 200 MWs, Orient Power Company 229 MWs, Saif Power Limited 229 MWs, Laraib Energy Limited 84 MWs and Uch-II Power Project of 404 MWs.

The government would continue to purchase electricity from the 18 IPPs under the take-and-pay mode until the private power market is established.

Originally published in The News