Islamabad, Oct 23: Govt Renegotiates Power Agreements With 8 IPPs, Reduces Costs Amid Energy Crisis
Eight bagasse-fired Independent Power Producers (IPPs) have had their contracts effectively renegotiated by the Energy Task Force, potentially saving the government between Rs. 85 and Rs. 100 billion.
According to Business Recorder, the updated agreements also lower the recently approved rate adjustment of Rs. 22 billion by the National Electric Power Regulatory Authority (NEPRA) by Rs. 8 billion.
Major sugar mills like JDW-II, Hamza Sugar Mills, and Chiniot Sugar Mills are among those included in the updated agreements.
The price of bagasse fuel has been reduced from Rs. 5,600 per ton to Rs. 4,500, and the updated fuel cost has been retroactively reduced by 5%. It is anticipated that 42% of the previously permitted tariffs for these IPPs will be affected by this modification.
In Rawalpindi, the talks lasted for three days. Muhammad Ali, the Prime Minister’s special assistant, affirmed that the agreements will save the government more than Rs. 100 billion in future payments by moving prices from a coal-linked structure to a PKR-based one.
The Govt Renegotiates Power Agreements also include revised financial terms, such as a 17 percent PKR-based return on equity and a 50 percent reduction in the working capital component.
Tariffs will be reviewed by NEPRA and modified as necessary, with the adjustments taking effect on October 31, 2024.
Concerns regarding NEPRA’s prior decisions to link bagasse power rates to global coal prices have sparked discussion on this topic in the Senate Standing Committee on Power.
