CPPA, KE to soon sign power purchase agreement for 1,000MW

ISLAMABAD: The Central Power Purchase Agency (CPPA) and K-Electric would soon sign the Power Purchase Agreement (PPA) at a marginal tariff of Rs22/unit to begin providing 1,000MW of electricity before the beginning of FY2024.

Under the proposed agreement, the federal government would be bound to provide 1,000MW of electricity at the minimum, which could go up depending upon the availability of excess electricity in the national grid, a senior official of the Energy Ministry told The News.

The additional electricity is proposed to be provided to K-Electric on pro-rata basis and quota of power Distribution Companies (Discos). “All the DISCOs get electricity from CPPA at the marginal tariff on which the electric power from the national grid is to be provided to K-Electric. The top notches of CPPA are currently examining the draft agreement which will soon be initialed,” the official added.

Once the agreement is signed between CPPA and K-Electric, the official said it would be analysed and approved by the Task Force on Energy headed by ex-Prime Minister Shahid Khaqan Abbasi.

After the go-ahead by the taskforce, Premier Shehbaz Sharif will give a go-ahead and then a summary will be prepared about the power purchase agreement (PPA) between CPPA and K-Electricity. Following that it would be pitched before CCoE and then to the federal cabinet for the formal approval. “This process may take two months to get approval,” the official informed.

Currently, he said, after the expiry of the earlier agreement in 2015, K-Electric was being provided electricity of almost 650MW per day without any agreement. However, since 2018, the federal government has not got any amount from the private utility company against the electricity provided to it. The amount that the private company has to pay has now reached to over Rs350 billion.

This is why, the official said, the central government has not provided the subsidy to KE and adjusted that against the non-payment of dues piled up in the head of electricity provided to it after 2018.

However, K-Electric CEO submitted in the Senate Committee meeting held on February 14, 2023 that total payable towards the government stood at Rs407.7 billion, while total receivables from different federal and provincial government entities stood at Rs483.6 billion. The net receivables stood at Rs76.7 billion

K-Electric also informed that a draft interconnection agreement for the supply of up to 2,050MW to KE from the national grid was initialed on November 10, 2021 which is still pending at CCoE for approval.