HUBCO says govt power deal ends prematurely

KARACHI (Reuters): Pakistan’s biggest private utility, Hub Power Company Ltd (HUBCO), unveiled on Thursday the premature termination of a pact for the government to buy power from a southwestern generation project.

The government and market operator the Central Power Purchasing Agency (CPPAG) agreed to settle the company’s outstanding receivables up to Oct 1, it told the Pakistan Stock Exchange (PSX) in a notice.

The step comes after Power Minister Awais Leghari told Reuters last month the government was re-negotiating deals with independent producers to rein in electricity tariffs as households and businesses buckle under soaring energy costs.

The company said its board approved an accelerated expiry date of Oct. 1 for the deal, instead of an initial date of March 2027, in an action taken “in the greater national interest”.

A decade ago, Pakistan approved dozens of private projects by independent power producers (IPPs), financed mostly by foreign lenders, to tackle chronic shortages.

But the deals, featuring incentives such as high guaranteed returns and commitments to pay even for unused power, ultimately resulted in excess capacity after a sustained economic crisis slashed consumption.

sparking protests by domestic users and industry bodies.

The need to revisit power deals was a key issue in talks for a critical staff-level pact in July with the International Monetary Fund (IMF) for a $7-billion bailout.

Pakistan has begun talks on reprofiling power sector debt owed to China and structural reforms, but progress has been slow. It has also vowed to stop power sector subsidies.