Islamabad, Nov 11: Govt Likely to Sign New Agreement with 18 IPPs in Two Weeks
An agreement with 18 Independent Power Producers (IPPs), who together may produce 4,267 MW of electricity under the 1994 and 2002 power regulations, is almost complete in Pakistan.
The main modification is moving electricity purchases from the existing “take or pay” method to a “take and pay” paradigm.
Unlike the former ‘take or pay’ arrangement, which paid for unused capacity, the new terms only require the government to pay for the electricity that is actually provided.
The government will compensate the IPPs in cash or T-bills for any past dues related to energy charges and capacity payments, but it will not make any interest payments.
Additionally, the government will continue to cover the operation and maintenance (O&M) costs to ensure the plants remain operational.
The 18 IPPs included in the deal are major power producers such as Uch-I Power Limited (586 MW), Pakgen Power Limited (365 MW), Liberty Power Daharki Ltd (235 MW), and others, with a combined capacity exceeding 4,000 MW.
The government is also committed to supporting the ongoing operation of these plants within the energy system.
This agreement is part of a larger initiative to eventually bring both private and government-owned power plants under the ‘take and pay’ model once the private power market fully establishes.
After concluding the deal with the 18 IPPs, the government will shift its focus to power plants, including LNG-based projects, GENCOs, and renewable energy plants, which will also transition to the same framework
