Islamabad: The government and K-Electric (KE) have agreed to sign a new power purchase agreement (PPA) to gain a total supply of 2,050 megawatts (MW) for Karachi – under this agreement, the government would timely payment of tariff subsidies and KE ‘would clear its power bills through standby letters of credit (SBLC)’, according to a news source.
Previously, the agreement with the electric firm was detailed to supply 650MW to the citizens of Karachi. In a related development, the government has committed to sign another agreement under which the ministry of finance will be liable to pay market-based mark on delayed subsidy payments.
Moreover, the KE will offer SBLCs supported by an escrow account to ensure that the Central Power Purchase Agency (CPPA) gets automatic payments for the monthly bills linked to the power supply to KE. The outstanding payables and receivables will be settled through arbitration.
Both parties have decided to hold further meetings to sort out the details of the agreement to satisfy the concerns of those involved. Minister for Planning and Development Asad Umar also confirmed that long-standing disputes regarding payables and receivables have been delinked to move forward for power supply to the citizens of Karachi.
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