ECC clears revised wind, solar pacts

• Renegotiated contracts expected to save Rs163bn• Govt to disburse Rs235bn outstanding dues to power producers

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday approved revised agreements with 14 wind power producers (WPPs), a solar project of the Punjab government, termination of a contract with an old and small independent power producer (IPP) and waiver of late payment surcharge with government-owned power plants (GPPs).

While these renegotiations would result in about Rs163 billion in savings over the life of the projects, the government would immediately disburse around Rs235bn in outstanding payments to GPPs and other power producers, sources close to the power secretary told Dawn.

The sources said the ECC also granted an extension until June this year for the utilisation of part of the Rs1.25 trillion borrowed from the banking sector last year to settle circular debt and payables to IPPs. The meeting, presided over by Finance Minister Muhammad Aurangzeb, also approved more than Rs10bn in supplementary grants for seven ministries and divisions.

The ECC was informed that wind power plants operating under the upfront tariff of 2013 and the cost-plus tariff until 2018 had significantly higher tariffs (up to Rs42 per unit) compared to projects approved after 2018, where tariffs were around Rs17 per unit.

A task force on energy led by Zafar Iqbal negotiated revised terms with wind power producers to reduce future tariff liabilities. Three WPPs operating under the 2013 tariff agreed to revise their agreements after the expiry of their debt repayment period.

Under the revised terms, the return on equity (RoE) will be fixed in rupees at the exchange rate prevailing at the time of debt repayment expiry, with reductions in........

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