Govt set to finalize ‘take and pay’ deal with 18 IPPs

With a total capacity of 4,267 MW, the government is nearing completion of an agreement with 18 Independent Power Producers (IPPs) to switch from a “take or pay” to a “take and pay” approach for electricity purchase.

A media report claims that the agreement, which is anticipated to be inked in two weeks, intends to lower yearly power expenses by an estimated Rs 70–100 billion.

Notable facilities including Uch-I Power Limited (586 MW), Pakgen Power Limited (365 MW), Engro Power Gen Qadirpur (227 MW), and Nishat Power Limited (200 MW) are among the 18 IPPs included in the deal.

The proposed deal would do away with fixed capacity payments, with the government only paying IPPs for real electricity sent to the grid.

No further interest payments will be made, but past due energy and capacity payments will be paid in cash or Treasury Bills.

An industry source stated that the government would pay for the upkeep and operational expenses required to keep the IPPs functioning, guaranteeing their availability within the energy grid.

The IPPs will be able to continue vital operations under the new paradigm with this help.

The government’s Power Task Force will concentrate on implementing the “take and pay” arrangement for state-owned power plants, including those that use LNG, GENCOs, and provincial, nuclear, and hydroelectric projects, when this agreement is concluded.

Until a competitive private electricity market is completely developed, this approach will continue to apply to these IPPs.