ISLAMABAD  -  The federal government has decided to terminate the Power Purchase Agreement with another Independent Power Producer (IPP), Pakgen Power Limited, having a capacity of 365MW with a generating cost of Rs 95.47 per unit.

The termination of contract with Pakgen Power Limited (PPL) will save billion of rupees as it is receiving over Rs 20.254 billion, annually, on account of Energy Purchase Price and Capacity Payments, official source told The Nation.

Of the total Rs 20.254 billion payments, during the previous fiscal year, the company received Rs 11.741 billion on account of Energy Purchase Prices, and Rs 8.513 billion on account of Capacity Payments. The EPP of the plant for previous fiscal was Rs 55.34 per unit, while Rs 40.13 per unit was capacity payment.

As per the profile of oil based 365MW  PPL [formerly known as AES Pak Gen Company Limited], was incorporated as an unlimited company in Pakistan, with the name of AES Pak Gen (Private) Company, on June 22, 1995 under the Companies Ordinance 1984.”  The Company was acquired by a Pakistani consortium in June 2010, and changed the company’s name to Pakgen Power Limited.

The Power Purchase Agreement (PPA) with PPL was executed in September, 1995, which is valid for a period of 30 years, while the commercial operation of the Company was commenced in February, 1998, said the official website of the company.

So far, the federal government had terminated/reviewed contracts with 13 IPPs. In October, the federal cabinet had terminated the power purchase agreements with five IPPs. The federal cabinet this month had also reviewed the contracts of eight power plants running on Bagasse. While the process for the termination of contracts with six oil-based IPPs is in the pipeline and will be officially announced soon. Termination of contracts with these IPPs will reduce capacity payments and will cut the power tariff for consumers.