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Federal Minister: IPPs contracts cannot be unilaterally ended


power sector

ISLAMABAD: Federal Minister for Energy Awais Leghari clarified to the Senate Standing Committee on Power that terminating contracts with independent power producers (IPPs) unilaterally is not permissible and could lead to significant financial penalties similar to those incurred from the Reko Diq mine case.

During the session, it was revealed that over the past decade, gas and liquefied natural gas (LNG)-based power plants has accumulated Rs538 billion in capacity payments. Meanwhile, furnace oil-based plants has received Rs 760 billion.

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Committee Chairman Mohsin Aziz noted that all IPP agreements have been disclosed. Their copies were also provided to the Senate Standing Committee on Power.

He pointed out that while the National Electric Power Regulatory Authority (NEPRA) sanctioned a 15 to 16 per cent profit margin for IPPs, their actual profit margins were reported between 60 to 70 per cent.

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Aziz also referenced the Muhammad Ali report, which cited issues of ‘over invoicing’ by IPPs and the absence of a ‘heat rate’ evaluation for these producers.

Senator Syed Shibli Faraz questioned the details of the agreements, including which administrations were involved. He noted that the profits of IPPs had exceeded those in the pharmaceutical industry.

In response, Minister Laghari stated that the Muhammad Ali report had recommended a ‘heat rate audit’ for IPPs, which remains pending.

Read more: HUBCO posts Rs 75 billion profit amid IPP debate and high electricity prices

The energy minister assured the committee that ‘positive’ developments were expected in the near future.

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