ECC clears revised pacts with 13 wind, 1 solar power projects

ISLAMABAD : In a major step towards power sector reforms, the Economic Coordination Committee (ECC) of the Cabinet has approved revisions to agreements with wind, solar and other power projects aimed at lowering electricity tariffs and reducing the sector’s financial burden.
Sources said the Task Force on Implementing Structural Reforms in the Power Sector, constituted by the Prime Minister on August 4, 2024, has already negotiated the termination of six Independent Power Producers (IPPs) and secured tariff reductions along with waivers of late payment interest (LPI) from thermal IPPs and government-owned power plants.
As part of the reform process, the Task Force also reviewed tariff structures of 14 wind power plants and one solar power project operating under the Power Policy 2006 after assessing their commercial and operational sustainability.
Wind power plants operating under the Upfront Tariff 2013 and cost-plus regime until 2018 have comparatively higher tariffs—up to Rs 42 per unit—compared to projects installed after 2018 under the revised cost-plus regime, where tariffs are around Rs 17 per unit. The Task Force therefore adopted different negotiation strategies and held multiple rounds of talks with wind power companies to reduce future tariff liabilities.
Three wind power plants operating under the Upfront Tariff 2013 agreed to key measures including fixing Return on Equity (RoE) in rupees at the exchange rate prevailing on the debt repayment expiry date, reduction in operation and maintenance (O&M) costs and insurance cap, waiver of LPI, and a lower delayed payment rate. The power purchaser will also clear outstanding dues within 90 days of the effective date.
These amendments are expected to generate estimated savings of Rs 38.9 billion over the life of the projects.
Similarly, eleven wind power plants operating under the cost-plus tariff regime after 2018 agreed to fix RoE at the exchange rate prevailing on the debt repayment expiry date, waive outstanding LPI, reduce the delayed payment rate and allow settlement of outstanding dues within 90 days. These amendments are expected to save Rs 78.63 billion over the projects’ life.
In the case of Quaid-e-Azam Solar Power (Pvt) Ltd, wholly owned by the Government of Punjab, the amendment agreement fixes RoE at 13 percent at a reference exchange rate of Rs168 per dollar, rationalises the O&M indexation mechanism and reduces the delayed payment rate.
The Task Force also recommended waiver of LPI receivable by the project as of July 16, 2025, in line with similar concessions by other government power plants. The amendments are expected to result in estimated savings of Rs 45.7 billion over the life of the project.
The ECC also approved a revised amendment agreement with Fauji Kabirwala Power Company Limited (FKPCL) after reconciliation of liquidated damages, including adjustments related to non-supply of gas/RLNG during the 16th agreement year, which was treated as a force majeure event.
The Power Division sought ECC approval to allow the Central Power Purchasing Agency-Guaranteed (CPPA-G) to settle outstanding payables of government power plants—excluding LPI—from the circular debt financing facility up to the amounts outstanding as of December 10, 2025.
The summary was circulated among key stakeholders including the Finance Division, CPPA-G, PPIB, NEPRA, Petroleum Division, FBR, Law and Justice Division, PAEC and the Government of Punjab. Most institutions supported the proposals, though the Finance Division flagged potential lower dividends for the government, while NPPMCL expressed concerns over the impact on the value of its shares.
Despite these reservations, the Power Division maintained that the measures would support broader structural reforms, help rationalise consumer tariffs and reduce the circular debt burden.
The ECC approved amendment agreements with 14 wind power plants and one solar power project and authorised CPPA-G to file tariff adjustment applications with NEPRA. It also approved waiver of LPI receivable by government power plants, including nuclear power plants, subject to verification by the power purchaser.
The accrued LPI up to December 10, 2025 will also be waived and adjusted against any LPI payable to SNGPL.