MM News

The federal government is ready to sign a new agreement with 18 Independent Power Producers (IPPs) in the next two weeks.

Under the new terms, IPPs will transition to a mandatory ‘take-and-pay’ model for electricity procurement. The agreement is expected to save the government between Rs. 70-100 billion annually.

Payments to IPPs will be based strictly on the actual electricity dispatched, removing capacity payments. Outstanding dues for energy and capacity payments will be cleared through cash or T-bills, excluding interest payments. The government will also cover the annual operation and maintenance costs to ensure plant functionality.

This arrangement will remain in effect until a private power market is established. After finalizing the deal with the IPPs, the government plans to extend the “take-and-pay” model to its own power plants, including LNG, nuclear, and hydropower projects, with the support of the Task Force on Power.

According to some media reports, the federal government is ready to sign new agreements with IPPs, focusing on cost reduction, energy efficiency, debt management, sustainability, and the transition to a private market, with the aim of ensuring affordable electricity for the public.