7 Independent Power Producers (IPPs) have offered the government that if the ongoing investigations into their alleged excessive profits are halted and pending court cases against them are withdrawn, they are willing to reduce electricity rates by up to 50 paisa per unit and waive a surcharge of over Rs 11 billion imposed on delayed payments.
According to a report by Geo News on Tuesday, the Central Power Purchasing Agency (CPPA) has stated that approval from NEPRA will be required, and CPPA has supported the IPPs’ request before NEPRA.
In a joint tariff revision request before NEPRA, representatives of the IPPs argued that the costs related to fuel and Operations & Maintenance (O&M) have already been settled. Therefore, they requested the regulator to terminate suo motu actions and investigations.
A representative of one of these IPPs stated that their request for tariff revision is conditional on the withdrawal of all legal cases against them. “Our request is conditional on the dismissal of all cases,” the representative said, adding that they have challenged all notices issued by NEPRA in the Islamabad High Court.
Similarly, a representative of another company also demanded the termination of suo motu actions against their institution. Supporting these requests, the CPPA informed NEPRA that future savings in fuel and O&M costs will be shared with the government to provide relief to consumers.
During a briefing, CPPA’s Managing Director stated that under ongoing negotiations, all seven IPPs have agreed to waive the surcharge of over Rs 11 billion imposed on delayed payments. CPPA further stated that after NEPRA’s approval, both parties – CPPA and IPPs – will withdraw the pending court cases.
During NEPRA’s hearing, discussions also took place on issues such as currency exchange rate adjustments, the ‘Take-and-Pay’ mechanism, and the insurance cap, which CPPA claims have already been settled. According to CPPA officials, negotiations with these seven IPPs are expected to result in a reduction of up to 50 paisa per unit in electricity rates.
They also mentioned that extensive negotiations with various IPPs have so far yielded financial benefits worth Rs 950 billion over the lifetime of power plants. CPPA officials stated, “So far, agreements have been reached with 29 IPPs,” emphasizing that no IPP was forced into an agreement.
“Any IPP that did not want to enter into an agreement was not pressured. For example, one power company did not sign the agreement.” NEPRA will review the requests and issue its decision.
