6 IPPs That Made Rs. 53 Billion in Extra Profit to be Taken to Local Arbitration Court

The contentious issue of excess profits by six independent power producers (IPPs) has led the government to consider the formation of a local arbitration court, a national daily reported.

The court is expected to consist of three local judges of the Supreme Court. The issue in concern is that six IPPs allegedly minted Rs. 53 billion above their actual earnings.


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The Attorney General of Pakistan (AGP) will update the Federal Cabinet to this effect. The next cabinet meeting is scheduled for tomorrow (Tuesday). If the cabinet approves the establishment of a local arbitration court, the process is likely to be completed post-haste, the newspaper quoted an official privy to the development.

Regarding the arbitration court, it is likely that one judge, either serving or retired, will be nominated by the government, another one by IPPs, and the two judges will then nominate the third one. This is how the local experts’ panel for arbitration on the issue of excess profits will be constituted.

In addition to this issue, the Federal Government is also in the process of signing MoUs and master agreements with IPPs, resolving the issue of circular debt payments. To date, 41 out of 47 IPPs that signed MoUs have initialed master agreements.


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These MoUs would expire by February 12, 2021, and for the government and IPPs to amicably arrive at the resolution, these IPPs need to formally sign legally binding contracts on the amended PPAs (Power Purchase Agreements) after getting nods from their board of directors (BoDs).

For the remaining IPPs, the government will seek additional time of at least one month to sign the altered PPAs.