ISLAMABAD: The federal government has decided to pay approximately Rs72 billion to five Independent Power Producers (IPPs) after they agreed to the early termination of their contracts.
Atlas Power, Saba Power, Rousch Power, Hubco and Lalpir Power had signed agreements to terminate their contracts early.
According to sources, the largest payment of Rs36.5 billion will be made to Hubco, followed by Rs15.5 billion to Rousch Power, Rs12.8 billion to AES Lalpir, Rs6 billion to Atlas Power, and Rs1 billion to Saba Power.
The total production capacity of the power plants being closed was 2,400 megawatts.
On October 10, the federal cabinet approved the termination of contracts with these five IPPs during a meeting in Islamabad, aimed at reducing electricity prices.
IPPs received billions of rupees from the government of Pakistan without generating electricity.
Faulty contracts were clinched with these companies, and as a result, the Pakistan government and the general public had to pay a heavy price.
The IPPs were found to have over-invoiced, making wind plants of the same capacity in Pakistan four times more expensive than in Bangladesh and Vietnam.
Despite Pakistan’s coal reserves, IPPs remained dependent on imported fuels such as high-speed diesel and coal for power generation, leading to the production of costly electricity