International Investors Beg Pakistan Not to Renegotiate Contracts With Solar and Wind IPPs

International investors have demanded the federal government to avoid renegotiating power purchase agreements (PPAs) with solar and wind Independent Power Producers (IPPs). A group of development finance institutions that have invested $2.7 billion in Pakistan’s power sector said this in a letter addressed to the Minister of Energy, Minister of Finance, and the Special Assistant to the Prime Minister on Energy. They said it would damage investor confidence and discourage future private investments. The lenders acknowledged Pakistan’s ongoing challenges in the energy sector and recognized the government’s efforts to address structural issues. However, they stressed that altering contracts without broad consultation could damage the credibility of Pakistan as an investment destination, particularly in renewable energy. They emphasized that investor confidence had been instrumental in attracting both local and foreign investments, which remain crucial for expanding the sector. The letter also highlighted that the IPPs financed by these institutions are bound by financing agreements that prohibit them from making any big contractual changes, including to their PPAs, without prior approval from lenders. The group urged the government to explore alternative solutions to energy sector challenges and respect the agreements they initially promised to honor. The lenders expressed their willingness to collaborate with the government in addressing the country’s energy issues.