Seven IPPs Seek Tariff Reduction Under Hybrid Take-and-Pay Model

IPPs

ISLAMABAD:* The National Electric Power Regulatory Authority (Nepra) has admitted a joint tariff reduction application filed by seven Independent Power Producers (IPPs) under the *Power Generation Policy 2002, in collaboration with the **Central Power Purchasing Agency-Guaranteed (CPPA-G). The proposal aligns with agreements made with the *Government’s Task Force on Power Sector Reforms.

The seven IPPs seeking tariff adjustments include:

  1. Nishat Chunian Power Limited
  2. Nishat Power Limited
  3. Narowal Energy Limited
  4. Liberty Power Tech Limited
  5. Engro Powergen Qadirpur Limited
  6. Sapphire Electric Power Limited
  7. Saif Power Limited

The *Task Force, headed by **Federal Minister for Power Sardar Awais Khan Leghari, also includes **SAPM on Power Muhammad Ali, National Coordinator Lt General Muhammad Zafar Iqbal, Chairman Nepra, CEO CPPA-G, Managing Director PPIB, and sector experts. The government claims the renegotiated contracts will *save Rs 1.4 trillion over the remaining lifespan of these projects.

Key Terms of the Tariff Reduction Agreement:

  • Effective Date: November 1, 2024
  • O&M Indexation: Mechanism revised
  • Working Capital & O&M Tariff: Rebasing applied
  • Return on Equity: Paid under hybrid take-and-pay model
  • Insurance Premium: Capped at 0.9% of EPC cost
  • Profit Sharing: Adjustments against CPPA receivables till FY 2023
  • Government Arbitration Withdrawal: Arbitration cases to be dropped
  • Outstanding Receivables: Payments due by *October 31, 2024, to be cleared *within 90 days of Cabinet approval
  • Delay Payment Waiver: Up to October 31, 2024
  • Arbitration Clause: London Court of International Arbitration (LCIA) to be replaced with Islamabad-seated arbitration under local laws

Of the 16 IPPs under the 2002 policy, one IPP—Halmore—refused to sign the agreement, alleging government coercion. The government has since directed Nepra to conduct a forensic audit of Halmore’s power plant. Nepra has invited public comments from stakeholders and affected parties and will hold a public hearing on March 24, 2025.

Story by Mushtaq Ghumman

Related posts