CORPORATE WINDOW: IPPs and capacity payments

After the National Electric Power Regulatory Authority (Nepra) tariff determination for FY25, the issue of capacity payments and independent power projects (IPPs) profits has re-emerged. The per-unit capacity payments have increased from Rs16.22 per kWh in FY24 to Rs17.31 per kWh in FY25. Social media alleged that IPPs are making enormous profits, so their power purchase agreements (PPA) must be re-negotiated to convert them to take-and-pay or merchant plants. About 52 per cent of the installed capacity is owned by the government. In the projected capacity purchase price (CPP) of FY25, the government’s share is 49pc, followed by the China-Pakistan Economic Corridor (CPEC) projects (36pc), and the remaining 15pc is of private projects (commissioned under 1994, 1995, 2002, and 2006).