Cabinet set to approve Rs403 Billion for IPPs

Excess payments to IPPs established under 2002 policy.

Islamabad, Feb 8: Federal Cabinet is all set to approve payment of Rs403 Billion to Independent Power Producers (IPPs) tomorrow after Cabinet Committee on Energy (CCoE) and Economic Coordination Committee of the Cabinet (ECC) recommended the same on Monday.

The government will release Rs161 Billion as first tranche of the payment after Cabinet approval while rest 60 per cent payment as second tranche.

Sources said Prime Minister’s Advisor Razzaq Dawood and Special Assistant Nadeem Babar left the meeting of CCoE due to conflict of interest as their power plants are to get benefit of billions of rupees.

CCoE and ECC recommended approval of the payments to IPPs after government signed new agreements with atleast 47 IPPs.

Nadeem Babar’s companies will get Rs 7 Billion after the settlement with IPPs including first tranche of Rs2.8 billion immediately and Rs4.2 Billion later.

Mian Mansha’s four IPPs, Lalpir, Pak Gen, Nishat Chunian and Nishat Power Ltd will get Rs60 Billion and Rs 24 Billion will be released as first tranche and the remaining Rs36 billion in second phase.

Other IPPs which are likely to get payments include KAPCO (Rs100 Billion), Liberty Power Tec Ltd (Rs25 Billion), Atlas Power (Rs15 Billion), HUBCO Power (Rs75 Billion) etc.

A report of the Power Commission had identified excess payments amounting to atleast Rs1000 to the IPPs in lieu of O&M, fuel costs, IRR, duplication of currency depreciation  and debt payments mismatch etc.

The government has not identified the mechanism through which excess payments made to the IPPs over the years would be recovered. However, PTI government claims the new agreements with IPPs will result in savings of Rs853 billion over the next 15 years.

The IPP Commission Report had identified Rs3.974 Billion as excess payments to Orient Power, only one company of PM’s Special Assistant Nadeem Babar, a figure he disputed in a letter to his cabinet colleague Omar Ayub.


Similarly, the IPP Commission Report identified Rs11.53 billion as excess payments to Nishat Chunian and Rs10.51 Billion to Nishat Power. Total excess payments amounting to Rs92.924 billion were made to thirteen IPPs established under the 2002 power policy.

PTI leadership in the past criticized PMLN’s finance minister Ishaq Dar for releasing Rs480 Billion to IPPs without pre-audit.