Govt, IPPs reach accord for bringing down power tariff

ISLAMABAD: The process towards signing the Master Agreements by independent power producers (IPPs) that earlier signed memorandums of understanding (MoUs) in August 2020 has begun as the government negotiation team and solar-based IPPs have reached an agreement.

To this effect, one solar IPP namely Harappa Solar Power Private Limited (HSL) having a capacity to generate 18MW electricity here on Saturday initiated the agreement with Central Power Purchasing Agency (CPPA). However, the management of Harappa Solar Power Private Limited will sign the formal agreement after it managed to get the go ahead from the board of directors. The cabinet will then approve the agreement, and after that it will be sent to National Electric Power Regulatory Authority (Nepra) for determining the discount in tariff as per the amended power purchase agreement (PPA). Harappa Solar Power Private Limited is included among the 47 IPPs which signed MOUs with the government in August 2020.

The life of MoUs stands for six months which will expire on February 12, 2021. The government is currently in talks with IPPs for finalisation of the dues payment mechanism. The government is supposed to pay Rs452 billion to IPPs. Once the payment mechanism gets finalised and payment of the first instalment of the dues is made, the IPPs will start signing the amended PPAs. However, the share of Harappa Solar Power Private Limited in the dues of Rs452 billion stands at Rs167 million.

Another solar IPP-- AJ Power is also included among the 47 IPPs but it has not yet initiated the Master Agreement.

The officials are terming this development as a major breakthrough in revamping the power sector and reduction of power tariff which will help reduce tariffs and circular debt in coming years. Harappa Solar (Private) Limited (HSPL) is situated near Harappa Bypass, Teshil and District Sahiwal. HSPL tariff is based on the 2016 Upfront Solar Tariff determined by Nepra. The project commenced commercial operations in October, 2017 and is the first of its kind in Pakistan with single axis tracking technology.