Deal with 18 IPPs on take-and-pay mode likely in two weeks

ISLAMABAD: The deal with 18 Independent Power Producers (IPPs) with a cumulative capacity to generate electricity of 4,267 MWs set up under 1994 and 2002 power policies on ‘take and pay’ mode for electricity purchase is likely to be inked in the next two weeks and this is how the government would save Rs70-100 billion a year.

Chances are bright for a deal on switching the 18 IPPs to take and pay mode for electricity purchase instead of the existing take or pay mode. It may take time of two weeks for the both to ink the new contracts.

According to the power sector industry and government officials, talks are going smoothly. “The government would pay the said 18 IPPs in the shape of cash or T-bills the past dues in the head of Energy Charges and Capacity PaymeAnts but they would not be paid interest payments.”

“The government would pay only against the actual electricity dispatch under ‘take and pay’ mode and IPPs would not be paid capacity payments at all. However, the government has assured the IPPs that it would also pay the annual expenditures enough to keep the power plants afloat to ensure their existence in the system.” In the head of operation and maintenance (O&M) cost, the government would continue to bail out the IPPs.

“The 18 IPPs that would be made operational now under take-and-pay mode are Uch-I Power Limited of 586 MWs, Pakgen Power Limited of 365 MWs, Liberty Power Daharki Ltd 235 MWs, Kohinoor Energy 131 MWs, Fauji Kabirwala Power Company Limited 157 MWs, Attock Gen Limited (165 MWs), Engro Power Gen Qadirpur Limited 227 MWs, Foundation Power (Daharki) of 185 MWs, Halmore Power Generation Company 225 MWs, Liberty Power Tech Limited 200 MWs, Liberty Power Tech Limited 225 MWs, Narowal Energy Tech Limited 220 MWs, Nishat Chunian Power Limited 200 MWs, Nishat Power Limited 200 MWs, Orient Power Company 229 MWs, Saif Power Limited 229 MWs, Laraib Energy Limited 84 MWs and Uch-II Power Project of 404 MWs.”

The government would continue to purchase electricity from the 18 IPPs under the take-and-pay mode until the private power market is established. “Once the deal with 18 IPPs is done, then the Task Force on Power would turn to the government power plants (GPPs) that include LNG-based power projects, GENCOs, provincial government plants, nuclear and hydropower power projects and they would also be treated as IPPs and become operational under ‘take and pay’ mode.”