A significant and major financial relief has been disclosed in Pakistan’s energy sector. Sources within the Ministry of Energy reveal that the government has achieved a historic saving of an estimated PKR 3,600 billion (PKR 3.6 Trillion) through the cancellation and renegotiation of old, expensive power purchase agreements with Independent Power Producers (IPPs).
Reasons for Contract Termination:
Ministry of Energy sources stated that several IPPs contracts were cancelled despite intense pressure from various quarters. The sources indicated that these agreements, originally signed about 20 years ago, had inflated electricity prices to exorbitant levels.
A major flaw in these expensive contracts was the continuous payment of Capacity Charges to these IPPs, even when they were not producing electricity. Sources claim that had these agreements continued, over PKR 3.6 trillion would have been extracted annually from the pockets of ordinary citizens.
Industry Reaction:
The industrial community has also expressed grave concern over the situation. They alleged that merely 40 families entered into the IPPs agreements and effectively held the entire country hostage. They demanded that the government take action against those who continue to receive billions of rupees despite operating closed or non-functional power plants.
The announcement of this massive saving comes as a significant financial relief for both the public and the government amidst the country’s current economic climate.
