Islamabad: Four major government power plants in Pakistan have requested the National Electric Power Regulatory Authority (Nepra) to approve a shift from their existing ‘take or pay’ agreements to a hybrid ‘take-and-pay’ model.
This change, if approved, is expected to save approximately Rs 2.162 trillion over the remaining lifespan of these projects.
The power plants involved include the Balloki Power Plant, Haveli Bahadur Shah, the 747 MW Guddu Power Plant, and the 525 MW Nandipur Power Plant.
According to the Central Power Purchasing Agency Guarantee (CPPA-G), the proposed model would result in significant reductions in future capacity payments and other obligations.
These savings are expected to include Rs 354 billion from the GENCOs (Nandipur and Guddu plants), Rs 1.808 trillion from the Haveli Bahadur Shah, Balloki, and QATPL plants, and Rs 498 billion from PTPL.
The revised tariff structure, which would follow the approval of Nepra, would result in tariff reductions for consumers. A public hearing to discuss the tariff modifications is scheduled for April 24, 2025.
Under the new agreement, both parties have signed a Negotiated Settlement Agreement (NSA), which outlines several key adjustments.
These include revisions to the Operation & Maintenance (O&M) components, with new indexing mechanisms for both local and foreign components, and an updated method for calculating the return on equity (RoE) components.
The hybrid take-and-pay model will allow for payment of 35% of the revised RoE components as part of the capacity payment (CPP).
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If the delivered Net Electrical Output (NEO) exceeds this 35% threshold, the company will be entitled to additional RoE payments based on actual generation beyond this limit.
CPPA-G and the power plants have formally requested Nepra to approve the revised tariffs, including the shift to the hybrid take-and-pay model, and to implement the changes in accordance with the provisions of the NSA.
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If approved, these changes are expected to be implemented shortly, with significant financial benefits for the sector and consumers.
