Islamabad, Mar 5, 2025: The Hub Power Company Limited (PSX: HUBC) disclosed on Wednesday that its fully owned subsidiary, Narowal Energy Limited (NEL), has formalized an Amendment Agreement with the Government of Pakistan and the Central Power Purchasing Agency (CPPA) to modify its tariff framework.
Hub Power Company agreement, signed on February 14, 2025, follows directives from a task force under the Prime Minister’s Office, aiming to transition to a ‘Hybrid Take-and-Pay’ model.
The updated terms, which take effect on November 1, 2024, introduce adjustments to the indexation structure for operations and maintenance (O&M), recalibrate the cost of working capital and O&M tariffs, and restructure the return on equity mechanism within the hybrid take-and-pay framework.
Authorities have capped the insurance premium tariff at 0.9 percent of the EPC cost.
As part of the revised agreement, the government has decided to retract arbitration proceedings previously initiated under the Arbitration Submission Agreements.
Meanwhile, CPPA has been mandated to settle all outstanding dues up to October 31, 2024, within 90 days following cabinet approval.
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The authorities will waive any late payment surcharges accrued until that date.
Additionally, local arbitration laws will now govern the arbitration provision in the existing Power Purchase Agreement (PPA).
This strategic adjustment aims to enhance operational efficiency, stabilize financial obligations, and support sustainable power sector reforms.
The transition towards a hybrid payment structure aims to create a more balanced and investor-friendly energy market while maintaining affordability and reliability for consumers.
