Around two dozen Independent Power Producers (IPPs) have initialed agreements with the government, subject to approval from the boards and Government of Pakistan, reported Business Recorder.
The government has also conveyed its consent to pay 40 percent of the total Rs. 450 billion in circular debt as a first installment soon after the signing of the final agreements, and that the remaining 60 percent will be paid in a lump sum during the next fiscal year.
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The report revealed that a portion of this payment will be made in cash to the IPPS, and Pakistan Investment Bonds (PIBs) and Sukuk bonds will be issued for the remaining amount,
Although the IPPs were to be paid in three installments prior to this agreement, the new two-installment plan has now been approved by the Minister for Finance, Dr. Abdul Hafeez Shaikh.
Minister Sheikh is also engaged in second staff review talks with the International Monetary Fund (IMF).
Some IPPS are yet to sign the agreement with the government, but experts on the matter believe that they will also consent to it. The concerned officials informed the media that not every IPP is required to be on board for this new policy to be implemented.
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A few days ago, the former Special Assistant to the Prime Minister (SAPM) on Power, Tabish Gauhar, stated that the government has taken a number of measures to reduce circular debts and tariffs. He also revealed that that the MoUs that the government had signed with 53 IPPs are now in the final phase and will be converted into agreements within the next few days.
He added that these agreements will facilitate the reduction of a financial burden of Rs. 836 billion over the next 20 years, while the IPP’s receivables, which are about Rs. 450 billion with accumulated interest, will also be paid this year.
Gauhar also remarked that the clubbing of the financial impact of the agreements between the IPPs and government-owned power plants will result in the lowering of the electricity prices by Rs. 1-2 per unit over the upcoming years.
Nothing to gain here… There should be free market economics. Consumer should be allowed to buy and sell electricity from wherever they want. Government is giving sovereign guarantees and forcing consumer to buy expensive electricity from local discos