Government seeks Rs1.6 trillion savings through revised power plant deals

The government has approached the National Electric Power Regulatory Authority (Nepra) to lower power purchase rates from four public sector power plants. This request aims to save approximately Rs1.58 trillion over the plants’ remaining lifespans.

Key changes include shifting from a ‘take or pay’ model to a ‘hybrid take and pay’ approach. These four power plants, which have a total capacity of 3,700 MW, include two LNG-based projects at Balloki and Haveli Bahadur Shah, along with the thermal-based Guddu and Nandipur plants. The LNG projects alone could save about Rs1.



1 trillion. Overall, the expected savings from all four plants are about Rs1.6 trillion, covering capacity charges and operational costs.

The government has also initiated formalities to add two more LNG projects from the Punjab government, which is expected to increase savings to Rs2.16 trillion. The power division’s Central Power Purchasing Agency (CPPA) stated that these changes follow the federal cabinet’s approval to ease tariff burdens on consumers.

Under the revised agreements, key components like operations and maintenance costs will be indexed quarterly. Furthermore, the return on equity rate will be fixed at 13% with adjusted currency exchange factors. The government estimates that similar negotiations with 29 independent power producers could generate total savings of Rs3.

5 trillion over the next several years..