ISLAMABAD: In a major development, owners of four independent power producers (IPPs) set up under the 1994 policy and another established under the 2002 policy have been asked in clear words to voluntarily terminate the power purchase agreements (PPAs) and go on pay and take mode, otherwise face the music, officials’ privy to the development told The News.
“The government would not pay capacity payments anymore in the range of Rs139-150 billion per annum to the said IPPs for the next 3-5 years, this has been told to the proprietors of the said five IPPs. They have also been categorically told that the government has already made excess payments to the said IPPs in the shape of the capacity payments and returns on equity and has also paid the loans of the IPPs.”
The owner of an IPP, officials said, responded to the main players of the task force on IPPs that if the government pays Rs55 billion to his company, he will not only be ready to terminate the contract but will also hand over the plant to the government.
“However, he has been told that the government will not pay Rs55 billion and will also not get control of the plant. He has the only option of terminating the agreement on his own.”
The authorities in the task force also pinpointed that the IPP management has been found in flouting the agreement with the government as it raised the funding for other powerhouses by pledging the plant, which is the negation of the contract. “So these wrongdoings are enough to initiate the criminal proceedings.”
“The owners have also been told that their IPPs are also involved in deceiving the government by wrongly showing losses in the head of O&M (operation and maintenance) during the period of 2020-24 making the unjustified profit in billions of rupees.”
The four owners, according to the officials, including the former state minister for petroleum during the PTI government, have been summoned to meet the main and powerful members of the task force on Saturday and the said IPPs’ proprietors have been told that they have no option but to terminate their agreements, otherwise forensic audit of their plants would kick start and recover excessive profits they made in the past through wrongdoings and initiate the proceedings against them. An eminent business tycoon from Lahore who also owns the power plants apart from holding other businesses in various sectors of the economy will meet the authorities today (Monday).
However, incumbent State Minister for Power Division Muhammad Ali is said to have offered the said IPPs that he would ensure the establishment of the private power market regime in the next two years so that they could sell their electricity to business players of the economy after terminating the power purchase agreements.