ISLAMABAD: The government has reached another milestone, as talks with six more independent power producers (IPPs) for cheaper electricity in the country remained successful.
According to details, the government team has struck successful deals with six new IPPs for affordable electricity. So far, 47 IPPs with an overall production capacity of 7450MW electricity have agreed to sign the agreement with the government for cheaper power supply to the consumers.
After the approval of the federal cabinet and Economic Coordination Committee (ECC), the signing of official contracts will take place.
A day earlier, Kot Addu Power Company Limited (KAPCO) initialed an agreement with Central Power Purchasing Agency (CPPA) to amend the power purchase agreement (PPA) and reduce existing capacity payments.
According to a statement issued to the Pakistan Stock Exchange (PSX) on Monday, “KAPCO and CPPA, on behalf of Water and Power Development Authority (WAPDA), have initialed a master agreement, with an amendment to power purchase agreement between the company and WAPDA in furtherance of the memorandum of understanding (MoU) executed on August 19, 2020, between the company and the government committee for negotiation with IPPs.”
These agreements were initialed by KAPCO on the request of the government of Pakistan in the larger national interest and in order to maintain the sustainability of the power sector. The initial terms of these agreements are, inter alia, that the existing capacity payments and variable O&M shall be reduced by 11pc; USD exchange rate and US CPI indexations shall be discontinued on 50pc of the reduced capacity payment (which shall be locked at National Bank of Pakistan’s TT/OD selling PKR/USD exchange rate of Rs168.60/USD without any local or international currency indexation or inflation adjustment for the future and the US CPI of August); USD exchange rate and US CPI indexations on a reduced variable O&M and 50pc of the reduced capacity payment shall continue as per existing arrangement; without prejudice to the terms of its generation license, KAPCO will have the option to participate in the competitive trading arrangement when it is implemented and becomes fully operational.
Subject to agreement on the terms and conditions and completion of legal and corporate formalities, the power purchaser shall consent to the extension of the power purchase agreement for an additional term following the expiry of the term of the PPA.
The final terms (in present or amended form) of these agreements and their execution are subject to receipt of requisite approvals, including, inter-alia, the approval of the federal cabinet, the company’s board of directors, its shareholders and also possible regulatory approvals, concluded the statement.
The government has reached another milestone, as talks with six more independent power producers (IPPs) for cheaper electricity in the country remained successful.