ISLAMABAD, Jan 2: The federal government has decided to relax rules for existing Independent Power Producers (IPPs) to add new power plants in a speedy manner owing to looming power shortages in the country.

Informed sources told Dawn on Monday that the Economic Coordination Committee (ECC) of the cabinet, scheduled to meet on January 4, would formally validate the decision. Prime Minister Shaukat Aziz will preside over the meeting.

These sources said that the Private Power and Infrastructure Board (PPIB) had proposed to the government to exempt existing IPPs from the condition of pre-qualification in view of their successful operations.

National Electric Power Regulatory Authority (Nepra) would also approve their tariff in advance so as to enable these IPPs to raise financing from the financial sector.

However, these IPPs would be required to deposit a bank guarantee of $10,000 per mega watt to achieve financial close within six months. In case of their failure to achieve financial close within the stipulated period, their bank guarantee would be encashed without any extension.

These IPPs would also have to complete their projects before a cut-off date of June 30, 2008, otherwise, their letters of support (LoS) would stand cancelled and bank guarantee confiscated.

Informed sources, however, said that some officials had opposed relaxation in rules to the existing players saying all the investors should be given a level- playing field to promote a healthy environment of competition. The PPIB has, however, insisted that these companies have proven track record and should not be subjected to unnecessary hindrances to avoid wastage of time.

Meanwhile, the ECC would also allow construction of six new dual fired thermal power plants of about 1450-mw generation capacity. These include a 225-mw Atlas power plant of Shirazi Corporation in Lahore, a 225-mw power plant of Gulistan Group in Gujranwala, 450-mw power plant of Ibrahim Group in Faisalabad and three DG Khan power plants of Nishat group in Lahore, Faisalabad and Kallar Kahar, each having 200-mw of power generation capacity.