Deals with IPPs: Rousch Power approves early termination of govt agreements

Rousch (Pakistan) Power Limited (RPPL), an Independent Power Producer (IPP), has approved the early termination of its long-term agreements with the government and has authorised its management to execute a negotiated settlement agreement.

The development was shared by Altern Energy Limited, the parent company of RPPL, in a notice to the Pakistan Stock Exchange (PSX) on Wednesday.

“In pursuance to the material information submitted to the PSX via letter no AEL/BOD/25/24 dated October 21, 2024, it is hereby informed that the shareholders of the subsidiary of the company, RPPL, in their extraordinary general meeting held on November 11, 2024, have approved the proposal for early termination of the Power Purchase Agreement (PPA) entered into with the Central Power Purchasing Agency (Guarantee) Limited (CPPA), Implementation Agreement (IA) entered into with the President of Islamic Republic of Pakistan on behalf of the Government of Pakistan, and the guarantee issued by the Government of Pakistan, and have authorised the management to execute a negotiated settlement agreement in this respect.,” read the notice.

Govt approves termination of existing Power Purchase Agreement with five IPPs

The company informed that “major terms of the negotiated settlement agreement are as follows: To terminate the agreements, which were scheduled to expire in 2032, with effect from October 01, 2024; receivables agreed between the parties as on September 30, 2024, will be paid by CPPA by December 31, 2024; and RPPL shall hand over the complex to the government by December 31, 2024”.

Last month, Business Recorder, citing its sources, said that the German government has conveyed reservations about RPPL, a power company owned by the family of former Minister of Commerce and Industries Abdul Razak Dawood.

According to the report, Georg Klussmann, Head of Division for Pakistan at German Federal Foreign Office, in a communication with Pakistan’s Embassy in Germany stated that the German government remains concerned about the manner of the negotiations with RPPL and shareholder i.e. Siemens.

The development comes as the government seeks to renegotiate or scrap contracts with IPPs in a bid to address financial challenges and streamline the power sector.

Last month, Hub Power Company Limited (HUBCO), Pakistan’s largest IPP, initiated a negotiated settlement agreement with the government.