Govt cancels IPP contracts to save Rs411bn

Prime Minister Shehbaz Sharif announced on Thursday that the government is terminating power purchase agreements with five Independent Power Producers (IPPs), aiming to save the national exchequer Rs411 billion and provide Rs60 billion in annual relief to electricity consumers.

The prime minister stated during his remarks at the federal cabinet meeting he was chairing that the termination of the agreements between the owners of IPPs and the Task Force on Power Sector Reforms was a step towards easing the load of capacity payments on consumers and would also result in lower electricity prices.

“The owners of five IPPs decided to end the agreements, putting the interests of the country ahead of their own. This is the initial drop of rain.

He informed the cabinet members that contracts with other IPPs will be gradually reviewed before the power rate is lowered.

The agreement stipulated that the IPPs with terminated contracts, namely Rousch Power, Saba Power, LALPIR, HUBCO, and Atlas Power, would be entitled to receive their arrears without any markup.

It was informed that because the Rousch Power unit was founded on the Build, Own, and Operate (BOP) model, the government would acquire ownership of it and the Privatisation Commission would proceed to privatize it.

The government would not be required to pay any fees upon the contract termination; the ownership of the remaining four IPPs would remain with their individual owners.

The time had come to address their problems, he remarked, thanking those who had patiently endured the inflation.

He also mentioned how the inflation had decreased from 30% to 6.9% in just seven months, well ahead of the aim for 2025. According to him, the administration has been working tirelessly to implement its promise of providing public relief, and the economy was rapidly improving.

Along with the Punjab government’s announcement to assist individuals using 201 to 500 units throughout the summer, Prime Minister Shehbaz also emphasized the Rs. 50 billion federal government subsidy for power users using up to 200 units.

He praised the expats for their trust in the policies of the government, as seen by the record $8.8 billion in international remittances they sent during the previous fiscal quarter.

The government has canceled agreements with five power plants intended to lower power tariffs in the near future, according to Federal Minister for Energy Awais Ahmed Khan Leghari, who made the announcement on Thursday.

He stated, “We applaud the prime minister, the head of the army, and the people of this country for shutting down the power plants that are not only wasting big amounts of our resources but also not producing results.”

He acknowledged the “National Task Force” team for reaching this milestone. According to him, all required steps have been made to accomplish the government’s goal of giving individuals in the power sector the most respite possible.