Islamabad: The Economic Coordination Committee (ECC) of the federal cabinet on Friday approved revised agreements with 14 wind power producers, amendments to a major solar power project in Punjab, termination of a small independent power producer (IPP) contract, and a reduction in late payment surcharge for government-owned power plants.
According to officials, the renegotiated agreements are expected to generate around Rs163 billion in savings over the lifetime of the projects. However, the government will also immediately release approximately Rs235 billion in outstanding payments to government power plants and other producers.
The meeting, chaired by Finance Minister Muhammad Aurangzeb, also approved an extension until June 2026 for the utilisation of a portion of the Rs1.25 trillion borrowed from the banking sector last year to address circular debt and outstanding dues of independent power producers.
Officials informed the ECC that wind power projects operating under the 2013 upfront tariff and the cost-plus tariff regime until 2018 had significantly higher tariffs—reaching up to Rs42 per unit—compared to projects approved after 2018, where tariffs average around Rs17 per unit.
A government task force on energy led by Zafar Iqbal negotiated revised terms with wind power producers to reduce tariff liabilities. Three wind projects operating under the 2013 tariff framework agreed to revise their agreements after the expiry of their debt repayment period.
Under the revised arrangements, the return on equity (RoE) will be fixed in rupees at the exchange rate prevailing at the time of debt repayment expiry. Additional measures include reductions in operation and maintenance (O&M) costs, rationalisation of indexation mechanisms, caps on insurance expenses, waiver of late payment interest, and lower delayed payment charges—subject to settlement of outstanding dues within 90 days. These changes are expected to generate Rs38.9 billion in savings over the life of the projects.
Meanwhile, 11 IPPs operating under the 2018 tariff framework also agreed to fix their RoE at the exchange rate applicable at the time of debt repayment completion, waive late payment interest on outstanding dues, and reduce future late payment charges, provided dues are cleared within 90 days. Together, these revisions are projected to produce Rs78.6 billion in savings.
The ECC was also informed that revisions to the Quaid-i-Azam Solar Power Pvt Ltd project of the Punjab government would generate Rs45.7 billion in savings. Under the updated agreement, the project’s 13 percent RoE has been fixed at an exchange rate of Rs168 per dollar, aligning it with similar arrangements for other government-owned power plants.
The renegotiated agreement also includes adjustments to late payment interest and related charges in exchange for immediate settlement of outstanding dues as of July 16, 2025.
In addition, the ECC approved revisions to the contract of Fauji Kabirwala Power Company, owned by the Fauji Foundation, due to fuel supply curtailment under force majeure conditions. Terms with Atlas Power Limited were also adjusted based on reconciled financial data, including the sharing of excess savings through a payment of Rs150 million to the project.
The contract with Altren Energy, a 29MW power plant, was terminated by mutual agreement as the project was no longer considered viable in the increasingly competitive energy market.
Furthermore, the ECC approved a downward revision in the late payment surcharge for government-owned power plants, despite concerns raised by the Finance Ministry regarding potential impacts on dividend flows. The Power Division of Pakistan has been authorised to sign revised power purchase agreements and approach the National Electric Power Regulatory Authority (NEPRA) for tariff adjustments.
The ECC also approved several supplementary grants. A summary from the Petroleum Division of Pakistan seeking Rs13.1 million for Pakistan’s annual contribution to the International Energy Forum (IEF) was endorsed to ensure the country’s continued participation in global energy dialogue.
Additionally, a technical supplementary grant of Rs3 billion was approved for gas supply schemes in villages located within a five-kilometre radius of gas production fields.
The committee also sanctioned Rs200 million for the Ministry of Federal Education and Professional Training to clear outstanding dues of teachers under the Basic Education Community Schools (BECS) programme.
Moreover, the ECC granted an exemption from relending terms for an additional $4 million allocated to the Higher Education Commission of Pakistan under the restructured Higher Education Development in Pakistan project, funded by the World Bank.
Finally, a technical supplementary grant of Rs3.63 billion was approved for the National Disaster Management Authority (NDMA) to reimburse expenditures incurred during the 2025 monsoon response operations and overseas humanitarian assistance efforts.
Story by Khaleeq Kiani
