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Friday, October 04, 2024  
29 Rabi ul Awal 1446  

Govt expands probe into Independent Power Producers amid resistance

Plant owners are reluctant to terminate contracts based on the current net value o
Photo via Business Recorder
Photo via Business Recorder

The government has broadened its investigation into numerous Independent Power Producers (IPPs) following silent pushback from some owners who maintain they are simply fulfilling their contractual obligations.

Sources indicate that investigators are examining data and documents from the offices and facilities of the power companies. Reports suggest that several plant owners are reluctant to terminate contracts based on the current net value of their Return on Equity (RoE).

This investigation coincides with the government’s aim to reduce costs by retiring certain IPPs, which could lead to significant savings on payments, excluding RoE.

Minister for Power Awais Leghari has emphasized that any changes to IPP agreements will not occur without the owners’ consent to avoid potential international legal disputes.

Investigators have summoned various IPP owners, urging them to propose solutions to the unsustainable tariff rates that burden the industry and society.

Critics have launched a campaign against the investigators, claiming a lack of consultation with power sector experts who might provide viable solutions to the financial losses exceeding Rs 800 billion, attributed to capacity payments amid a declining demand for electricity.

Some IPP owners, excluding those with Chinese investments, are reportedly leveraging international lenders to pressure the government into relaxing the conditions set for renegotiating contracts.

A Task Force overseeing the investigation is conducting meetings in a discreet location in Rawalpindi.

Read more

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How capacity charges make you pay for electricity you never use

Govt renegotiating power deals with IPPs to cut costs: Leghari

The probe also includes scrutiny of alleged inflated production costs reported by the Securities and Exchange Commission of Pakistan (SECP) in 2013, affecting several IPPs.

Many of these companies have shown reluctance to cooperate with the SECP’s inspections, with some seeking legal extensions and filing appeals against the inspection orders.

As the investigation unfolds, legal experts familiar with IPP matters are preparing for extended litigation, both locally and internationally.

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IPPs

Pakistani govt

RoE