• 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 the operation and maintenance (O&M) component, rationalisation of indexation mechanisms, caps on insurance costs, waiver of late payment interest and lower delayed payment charges, subject to settlement of outstanding dues within 90 days. These measures are expected to save about Rs38.9bn over the projects’ lifetimes.

Eleven IPPs operating under the 2018 tariff framework also agreed to fix RoE at the exchange rate prevailing on the debt repayment expiry date, waive late payment interest on outstanding amounts and reduce future late payment rates, subject to full settlement of dues within 90 days. These two categories together are expected to generate savings of about Rs78.6bn over the projects’ life, the ECC was told.

Another Rs45.7bn in savings is expected from the revision of the Quaid-i-Azam Solar Power (Pvt) Ltd (QASPL) project of the Punjab government. Under the revised agreement, the RoE of 13pc has been fixed at an exchange rate of Rs168 per dollar, in line with similar agreements with other GPPs.

The agreement also involves revisions in late payment interest and related charges against immediate payment of outstanding dues as of July 16, 2025.

The renegotiated contract with Fauji Kabirwala Power Company, owned by the Fauji Foundation, was also revised to the benefit of the IPP due to curtailed fuel supplies under force majeure conditions.

Similarly, terms with Atlas Power were adjusted based on reconciled data, including the sharing of excess savings through a payment of Rs150 million to the project. The contract with Altren Energy, a 29MW plant, was also terminated with mutual agreement as the project had lost utility in the competitive energy market.

The late payment surcharge for GPPs was also revised downward despite concerns from the Ministry of Finance that it could affect their dividend flows. The ECC allowed the Power Division and its entities to sign revised power purchase agreements and approach Nepra for tariff adjustments.

The ECC also approved several supplementary grants.

A summary from the Petroleum Division seeking Rs13.1m for Pakistan’s annual contribution to the International Energy Forum (IEF) was approved. Officials said continued membership in the forum was important for Pakistan’s participation in the global energy dialogue.

Another summary from the Petroleum Division seeking a technical supplementary grant (TSG) of Rs3bn for gas supply schemes in villages located within a five-kilometre radius of gas production fields was also approved.

The ECC also approved a TSG of Rs200m during FY26 for the Ministry of Federal Education and Professional Training to pay outstanding dues to teachers of Basic Education Community Schools (BECS).

The committee also approved an exemption from relending terms for an additional $4m allocated to the Higher Education Commission under the restructured Higher Education Development in Pakistan project, following reallocation of funds by the World Bank.

A TSG of Rs3.63bn was also approved for the National Disaster Management Authority (NDMA) to reimburse expenditures incurred during the 2025 monsoon response operations and overseas humanitarian assistance.

Published in Dawn, March 7th, 2026