ECC revises power purchase contracts with 15 plants, projects Rs163 billion savings

The Economic Coordination Committee (ECC) of the Cabinet on Friday approved revised electricity purchase agreements with 15 power plants, a move the government said would generate savings of about Rs163 billion over the remaining life of the contracts.

The decision was taken at a meeting chaired by Finance Minister Muhammad Aurangzeb. The revised agreements cover 14 wind power plants and the Quaid-e-Azam Solar Power Plant, while the contract of Altern Energy Limited was terminated. The ECC also revised agreements with Fauji Kabirwala Power Plant and Atlas Power Limited.

According to the Ministry of Finance, the measures follow negotiations with several power producers and aim to adjust tariff structures, streamline payment arrangements and address outstanding liabilities.

The government expects the changes to help reduce energy costs and facilitate the settlement of about Rs235 billion in outstanding payments owed to government-owned power plants.

The ECC also extended the waiver of late payment surcharges on government-owned power plants for another year to allow space for clearing these dues.

Existing wind power agreements had created differences in tariff levels, with plants operating under the upfront tariff policy receiving about Rs42 per unit while cost-plus plants were paid around Rs17 per unit.

Under the revised arrangements, three wind power plants established under the 2013 upfront tariff policy agreed to shift to a fixed return on equity in local currency based on the exchange rate at the time of debt repayment expiry. The plants also accepted reductions in operation and maintenance costs, insurance cost caps and late payment interest, while the KIBOR rate applied to delayed payments has been reduced by two percentage points.

In return, these plants will receive their outstanding dues upon execution of the new agreements. The government estimates savings of about Rs39 billion from these three plants over the remaining contract period.

The ECC also approved revised terms for 11 cost-plus wind plants, expected to generate additional savings of Rs79 billion.

For the Quaid-e-Azam Solar Power Plant, the committee fixed the return on equity at 13 percent and set the exchange rate at Rs168 per dollar, aligning it with other revised power sector agreements. The change is projected to save Rs46 billion.

The agreement with Fauji Kabirwala Power Plant was also revised, with the ECC waiving liquidated damages related to fuel supply shortfalls after declaring the issue a force majeure event.

Separately, the ECC approved several supplementary grants. A Rs3 billion grant was approved for gas supply schemes in villages located within a five-kilometre radius of gas production fields, to be implemented through Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited.

The committee also approved Rs3.6 billion requested by the National Disaster Management Authority for reimbursement of expenses related to Monsoon Response 2025 operations and overseas humanitarian assistance.

In addition, the ECC approved Rs1.3 billion for the parliamentarians’ development scheme and sanctioned Rs1.5 billion for federal public information campaigns, against a requested Rs2.2 billion. The remaining requirement will be reviewed in the next quarter.