Government Prepares Tougher Power Purchase Agreements for 18 Independent Power Producers

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The federal government is set to finalize four new options that will transition 18 Independent Power Producers (IPPs) from a ‘take or pay’ model to a ‘take and pay’ framework, with notifications anticipated next week, according to Business Recorder.

These IPPs, which collectively possess a capacity of 4,267 MW, have already been informed about the upcoming contract adjustments. The Central Power Purchasing Agency (CPPA) has suspended payments to these producers, prompting some IPPs to express a willingness to amend their contracts to help alleviate Pakistan’s ongoing power sector crisis. However, other producers have resisted these changes, emphasizing the need for fair negotiations to protect future investments.

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The government is working swiftly to finalize agreements and address the situation, having already reached an agreement on due capacity payments of approximately Rs. 72 billion to five of the IPPs. The revised contracts are expected to stabilize the power sector and foster sustainable investments in the future. Nevertheless, it remains uncertain whether these changes will lead to lower electricity rates for consumers.
 
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