The federal government has decided to pay around Rs72 billion to five Independent Power Producers (IPPs) as part of a deal for the early termination of their contracts.
The companies involved include Atlas Power, Saba Power, Rousch Power, Hubco, and Lalpir Power.
According to sources, the largest payout of Rs36.5 billion will go 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. Collectively, the power plants being decommissioned had a total production capacity of 2,400 megawatts.
The decision to terminate these contracts was approved by the federal cabinet during a meeting on October 10, in Islamabad. The move is part of efforts to reduce electricity costs in the country.
Cabinet Approves Independent Electricity Market
These IPPs were previously criticized for receiving substantial payments from the government without delivering electricity. The agreements with the companies were reported to be flawed, leading to significant financial losses for both the government and the public.
Investigations revealed that the IPPs had over-invoiced, making wind power projects in Pakistan four times more expensive compared to similar projects in Bangladesh and Vietnam.