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Government sign formal agreement with Solar Power Plant for decrease in Tariff

January 10, 2021

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Consequent to the memorandums of understanding signed between Government and independent power producers (IPPs) in August 2020, Solar IPPs have now started signing formal agreements to revise down their tariffs as per the consensus acvhieved.

In this regard, Harappa Solar Power Private Limited (HSL) of 18MW electricity initiated the agreement with Central Power Purchasing Agency (CPPA) for downward revision of its Tariff. Harappa Solar (Private) Limited (HSPL) is situated near District Sahiwal. HSPL tariff is based on the 2016 Upfront Solar Tariff determined by Nepra. The project commenced commercial operations in October, 2017 and is the first of its kind in Pakistan with single axis tracking technology.

The management of Harappa Solar Power Private Limited will sign the formal agreement after it getting approval from its board of directors. After approval from Cabinet it will be sent to National Electric Power Regulatory Authority (Nepra) for determining the discount in tariff as per the amended power purchase agreement (PPA).

Harappa Solar Power Private Limited is one of the 47 IPPs which have signed MOUs with the government in August 2020.

The MoUs are valid for six months and will expire on 12th February, 2021. Currently, the government is in negotiations with IPPs for finalisation of the dues payment mechanism under Circular Debt resolution. The government is expected to pay Rs. 452 billion to IPPs. Once the payment under Circualr Debt are paid against receivables of the IPPs, the IPPs will start signing the amended PPAs with lower tariffs. Harappa Solar Power Private Limited has only Rs167 million receivables from the government.

The downward revision of the IPP is being considered as a major breakthrough in revamping the power sector and reduction of power tariff which is expected to help reduce tariffs and circular debt in coming years.