IPP deals: Saif Power approves revised agreements with govt

Saif Power Limited (SPWL), an Independent Power Producer (IPP), has approved implementing amended agreements with the government.

The development was shared by SPWL in its notice to the Pakistan Stock Exchange (PSX) on Friday.

“The Board of Directors (BoD) of SPWL has discussed and approved the amendments to Power Purchase Agreement (PPA), Implementation Agreement (IA) and to revise tariff as proposed by the Task Force constituted by the Prime Minister of Pakistan to convert the existing tariff to ‘Hybrid Take and Pay’ to execute amendment agreement with the Government of Islamic Republic of Pakistan and the Central Power Purchasing Agency (Guarantee) Limited to implement the proposed amendments,” read the notice.

The development comes as the government seeks to renegotiate or scrap contracts with IPPs to address financial challenges and streamline the power sector.

Under the terms and conditions of the amendment agreement, the amendment agreement shall be effective from November 01, 2024.

Meanwhile, the indexation mechanism of O&M has been changed, whereas the tariff of cost of working capital and O&M have been revised.

“Return on Equity tariff component will be paid in a hybrid take and pay mode; Insurance premium tariff is capped at 0.9% of EPC cost,” read the notice.

Under the amended agreement, the government will unconditionally withdraw arbitration under Arbitration submission Agreements.

“Payment of outstanding receivables as of Oct 31, 2024, within 90 days of approval of the agreement by the Cabinet; Waiver of late payment interest till Oct 31, 2024; and LCIA Arbitration clause in PPA will be substituted with Islamabad seated Arbitration under the local laws,” read the notice.

Incorporated in Pakistan on November 11, 2004, as a public limited company, the principal activities of Saif Power Limited are to own, operate and maintain a combined cycle power plant having a nameplate capacity of 225 MW (ISO) and sell the electricity to Central Power Purchasing Agency Guarantee Limited (CPPA-G).

Days ago, Nishat Chunian Power Limited (NCPL) approved the implementation of amended agreements with the government.

Last month, Rousch (Pakistan) Power Limited (RPPL) approved the early termination of its long-term agreements with the government and authorised its management to execute a negotiated settlement agreement.

In October, Hub Power Company Limited (HUBCO), Pakistan’s largest IPP, initiated a negotiated settlement agreement with the government.