Revision of agreements with other IPPs will gradually lower tariffs, create fiscal space of Rs411bn annually, says premier
Ansar M Bhatti
ISLAMABAD: Prime Minister Shehbaz Sharif said on Thursday that five independent power producers (IPPs) have “voluntarily” agreed to cancel their power purchase agreements with the federal government, providing Rs60 billion in annual relief to inflation-hit consumers, following extended talks with the authorities.
“By voluntarily agreeing to terminate their contracts prematurely with the government, these five IPPs prioritised the nation’s interests over their own,” the premier said addressing the Cabinet.
“The “take or pay” contracts with the five independent power producers have been fully terminated, and they will only receive the outstanding amounts owed by the government, without any interest.”
The federal government has been under immense pressure to reconsider its power purchase agreements (PPAs) with the IPPs following outcry across the country as the addition of capacity payment charges inflated the power bills beyond the affordability of the inflation-burdened masses.
The PM said that in the first phase, five IPPs were ending deals with the government; however, revision of PPAs with other IPPs would gradually lower the tariff further, saving the national exchequer Rs411 billion a year, creating more fiscal space for the cash-strapped country.
PM Shehbaz said: “The rate of inflation was more than 30% [in the same month during the previous year], it now stands at 6.9%.”
