Govt to pay Rs 2.14 trillion in capacity payments to IPPs for FY25

From the entire capacity, payments of Rs. 2,140 billion to be paid by consumers in the power tariff in the fiscal year 2025, the major share of Rs. 1,069 billion will go to government power plants and Rs. 707 billion to power plants established under the CPEC umbrella.  

On the other hand, the 10th IPPs set up under the 1994 power policy would about to get just Rs. 72 billion per annum, so capacity payment and 13 IPPs under the 2002 policy Rs. 93 billion a year as the value of the US dollar for the claimed IPPs seized at Rs. 148 during the PTI regime. 

This is how 23 IPPs that are functioning under the 1994 and 2002 power policy will be anticipated to be getting annual capacity payments of Rs. 165 billion. The volume of capacity payments of 23 IPPs comes up with an impact of Rs. 1.65 per unit. However, the government has already declared to end the power purchase agreements of 5 IPPs [4 installed during the 1994 policy and 1 established under the 2002 policy}. 

 Doing away with the contracts of the 5 IPPs is anticipated to assist the government save Rs. 300 billion in the upcoming 3-10 years. However, sources claim that some of the 5 IPPs have displayed the intention to move London Court of Arbitration as some of their foreign lenders and shareholders are not ready to erase the contracts. 

Furthermore, the government has decided to shift 17 IPPs to take and pay more from the present take-or-pay mechanism. Furthermore, the government power plants are expected to attain a huge amount of Rs. 1,069 billion. The nuclear power plants are anticipated to get Rs. 4.6 billion in the shape of capacity payments in fiscal year 2025, and hydropower projects Rs. 4.46 billion.

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GENCOs Rs. 16 billion. RLNG power plants Rs. 161 billion. So, the impact of Rs. 1,069 billion emerges in the tariff as Rs. 10.69 billion per unit. Interestingly as per the data, power projects that are installed in the CPEC are anticipated to get Rs. 707 billion as Rs. 7.07 per unit in the tariff, and renewable wind power plants Rs. 161 billion as Rs. 1.61 per unit, solar plants Rs. 31 billion as Rs. 0.61 per unit, bagasse-based power plants or big gas-oriented power plants are at Rs. 7 billion as Rs. 0.7 per unit. 

The capacity payment for a single Sahiwal coal power plant is more than half of all 2002 IPP combined. The capacity payment on government plants {RLNG and nuclear hydel is considered to be 5 times that of all old IPPs combined.  

The IPP average capacity tariff was at Rs. 2.78 per unit in tariff determination 2015-2016 but it had hiked to Rs. 18.39 per unit for fiscal year 2025 due to the new inclusion of power plants under the 2015 power policy and the massive devaluation of Pakistani currency in rupees which went down to Rs. 2.78 from Rs. 97 against 1 US dollar.

More importantly, LIBOR Interbank Offer Rate hiked from 0.45 PC to 5.5 PC per annum and KIBOR Karachi Interbank Offer Rate also hiked intensifying the debt servicing component of the capacity payment. The less electricity by the people because of the highest tariff in the region also becomes the cause of the increase in capacity payments. Of 2,142 billion capacity payments presently, the consumers pay per annum Rs. 1,083 billion in the head of debt servicing for the loans borrowed mainly for new additions in power generation under the 2015 power policy.