Five IPPs contracts terminated to save Rs411bn, provide Rs60bn relief to consumers: PM

Islamabad: The government on Thursday announced the termination of the power purchase agreement with five Independent Power Producers (IPPs) which Prime Minister Shehbaz Sharif said would provide Rs60 billion annual relief to the electricity consumers and cumulatively save Rs411 billion to the national exchequer.

The prime minister, in his remarks at the meeting of the federal cabinet he chaired, said the termination of agreements, signed between the Task Force on Power Sector Reforms and IPPs owners, was part of the efforts to reduce the burden of capacity payments being borne by the consumers and that it would also reduce the electricity prices.

“The owners of five IPPs agreed to terminate the contracts preferring the national interest to their own. This is the first raindrop. This will follow the rain to green the whole region,” he remarked and thanked his team members including the task force on power sector reforms, President Asif Ali Zardari and Chief of the Army Staff for their efforts and PML-N president Nawaz Sharif for constant push.

He told the cabinet members that the power tariff would be reduced after a gradual review of contracts with other IPPs.

Under the agreement, the IPPs whose contracts had been terminated including Rousch Power, Saba Power, LALPIR, HUBCO and Atlas Power, would be liable to receive their arrears sans mark-up.

It was told that the Rousch Power unit was established under the Build, Own and Operate (BOP) basis, so its ownership would be transferred to the government for its onward privatisation by the Privatisation Commission. The ownership of the rest four IPPs would remain with their respective owners and after the contract termination, the government would not be liable to pay any charges.

Expressing gratitude to the people who faced the inflation with patience, said the time had come to address their woes and mentioned the reduced inflation from 30% to 6.9% – a target achieved within seven months, far before the commitment for 2025.

He said the economy was improving fast and the government had made untiring efforts to fulfil its manifesto of public relief.

Prime Minister Shehbaz also mentioned the federal government’s Rs50 billion subsidy for power consumers using up to 200 units and the other announced by the Punjab government to support those using 201 to 500 units during the summer.

He lauded the expatriates for sending a record $8.8 billion in foreign remittances during the previous fiscal quarter which was also the manifestation of their trust in the government policies.