Five independent power producers (IPPs) have agreed to cancel their Power Purchase Agreements (PPAs) with the government, according to a source from the Task Force on the Power Sector. These agreements are tied to power policies from 1994 and 2002.
Though the IPPs will not receive future payments, they will be compensated for previous dues, excluding interest. Discussions are also underway regarding Rs80-100 billion owed in past capacity payments.
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Once finalized, the IPPs that operate under the build, operate, own, and transfer (BOOT) model will be handed over to the government, while others will remain privately owned. The move is expected to save Rs300 billion in capacity payments over the next 3-10 years, potentially reducing electricity prices by Rs0.60 per unit, benefitting consumers by Rs60 billion annually.
The government is also working to transition 17 additional IPPs to a take-and-pay system and aims to establish a Competitive Trading Bilateral Contract Market (CTBCM) within two years, allowing IPPs to sell electricity directly to clients.
Efforts are also being made to reduce the high tariff of wind and solar plants, which are currently charging much higher rates than the government believes is sustainable.
