The government is close to finalising an agreement with 18 Independent Power Producers (IPPs), with a combined capacity of 4,267 MW, to move from a “take or pay” to a “take and pay” model for electricity purchases.
According to a media report, the deal, expected to be signed within two weeks, aims to reduce annual power costs by an estimated Rs 70-100 billion.
The 18 IPPs covered by the agreement include notable facilities such as Uch-I Power Limited (586 MW), Pakgen Power Limited (365 MW), Engro Power Gen Qadirpur (227 MW), and Nishat Power Limited (200 MW), among others.
Under the proposed agreement, the government would only pay IPPs for actual electricity dispatched to the grid, eliminating fixed capacity payments.
While past dues related to energy and capacity payments will be settled in cash or Treasury bills, no additional interest payments will be made.
“The government will cover necessary operational and maintenance costs to keep the IPPs functional, ensuring their availability within the energy system,” an industry source said. This support will allow the IPPs to maintain essential operations under the new model.
Once this agreement is finalised, the government’s Power Task Force will shift its focus to applying the “take and pay” structure to state-owned power plants, including those using LNG, GENCOs, and provincial, nuclear, and hydropower projects.
This model will remain in place for these IPPs until a competitive private power market is fully established.
