Govt Cancels Costly IPP Contracts Worth Rs. 3.6 Trillion

The government has saved Rs. 3,600 billion by canceling and reviewing independent power producer (IPP) contracts that had long burdened the power sector. Several expensive IPP agreements have been terminated or renegotiated despite strong resistance, resulting in savings worth trillions of rupees, reported a news daily. These contracts, signed around two decades ago with about 40 private power producers, forced the government to pay billions annually in capacity charges even when electricity was not generated. Officials said the previous arrangements drained approximately Rs. 3.6 trillion from consumers each year through inflated tariffs and idle plant payments. The industrial community has already urged the government to hold accountable those responsible for the agreements, saying that a small group of IPP owners had effectively held the country’s energy system hostage while collecting billions from non-operational plants.