The government’s decision to terminate the contracts of six Independent Power Producers immediately, and that of another nine over the next three to five years is not as macho as it would like it to seem, but the consumer will take whatever relief it gives them. Someone seems to have remembered that all these agreements were on BOOT (build, own, operate, transfer) basis, spread over a certain time frame, and it was time to enter the last phase of the contract, which was to transfer the plant to WAPDA. That is the reason why the majority of IPPs will not have their contracts terminated: they will be ended only when they duly expire. The capacity charges are now explained: they represent the return on investment. Now the original investment made has been returned, it is time that these companies hand WAPDA the plants. As these plants come out of the contract, theory will no longer attract capacity charges, but will only charge the distribution companies for the units they actually sell.
The passing of these IPPs into the private sector will raise three major issues. Are the companies to remain as such and pass into the hands of the Generation Company they are allotted to, or are the companies to be dissolved and the assets (the power stations) alone to be transferred? What is the price of the electricity they generate? Are the plants to be privatized individually, or only as part of the GENCO they will presumably be allocated to? Presumably the government has answers. But it has not shared them with the public as yet. And the public is interested; it affects their bill after all.
The government seems to v=have m0ved t0 IPPs after it has dealt with the task of getting the budget passed and the OMF package approved. Now it seems to have moved on to the task of getting the electricity tariff down. It seems to realize that it is far too high for comfort.
