Saif Power Limited (SPWL), a prominent Independent Power Producer (IPP), has announced its Board of Directors’ approval for amendments to agreements with the government. This disclosure, made in a filing to the Pakistan Stock Exchange, is part of the company’s alignment with ongoing reforms in the power sector.
The revisions involve significant changes to the Power Purchase Agreement (PPA), the Implementation Agreement (IA), and tariffs, following recommendations by a task force established by the Prime Minister.Â
These changes are intended to transition SPWL’s tariff structure to a “Hybrid Take and Pay” model, implemented in collaboration with the Government of Pakistan and the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G).
The agreements, retroactively effective from November 1, 2024, include adjustments to the indexation mechanism for operation and maintenance costs, revisions to working capital and O&M tariffs, and capping insurance premiums at 0.9% of the EPC cost. The government will settle outstanding receivables as of October 31, 2024, within 90 days of cabinet approval, while waiving late payment interest until that date. The arbitration mechanism has also been shifted to Islamabad under local laws, replacing the previous arrangement with the London Court of International Arbitration.
These amendments are part of a broader strategy by the government to address inefficiencies in the energy sector, reduce fiscal pressures, and improve the financial sustainability of power producers. SPWL, which operates a combined cycle power plant with a capacity of 225 MW, is one of several IPPs engaging in renegotiations. Recent developments in the sector include revised agreements by Nishat Chunian Power Limited and Rousch (Pakistan) Power Limited, alongside settlement discussions initiated by Hub Power Company Limited.
