The government on Thursday announced the termination of the power purchase agreement with five Independent Power Producers (IPPs) which Prime Minister Shehbaz Sharif said it would provide Rs60 billion annual relief to the electricity consumers and cumulatively save Rs411 billion to the national exchequer.
He said the federal cabinet has decided to terminate the contracts of five IPPs in the first phase to end the burden of capacity payments on consumers. The government is expected to save Rs. 411 billion and potentially lower the per-unit price of electricity.
Under the agreement, the IPPs whose contracts had been terminated including Rousch Power, Saba Power, LALPIR, HUBCO and Atlas Power, would be liable to receive their arrears sans mark-up.
It was told that the Rousch Power unit was established under the Build, Own and Operate (BOP) basis, so its ownership would be transferred to the government for its onward privatization by the Privatization Commission. The ownership of the rest four IPPs would remain with their respective owners and after the contract termination, the government would not be liable to pay any charges.
The premier said plans are underway to gradually revise contracts with other IPPs as well. He credited the hard work of his economic team and noted that the goal of reducing inflation has been realized ahead of schedule. Pertinently, inflation has dropped from over 30 percent to 6.9 percent.
The Prime Minister expressed gratitude to the five IPP owners for agreeing to terminate their contracts voluntarily. He acknowledged the work done by the federal cabinet and the task force working on power sector reforms.
The premier briefly recalled the record inflow of workers’ remittances from overseas Pakistanis, which rose to $8.8 billion in the last quarter.
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