ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday has approved revisions to agreements with about 20 wind, solar and other power projects, a move expected to save billions of rupees and reduce electricity tariffs for consumers, subject to formal approval by the National Electric Power Regulatory Authority (NEPRA). Sharing the details sources said the Task Force on Implementing Structural Reforms in the Power Sector, constituted by the Prime Minister on August 4, 2024, has already successfully negotiated the termination of six Independent Power Producers (IPPs) and secured tariff reductions along with the waiver of late payment interest (LPI) from thermal IPPs and government-owned power plants. Continuing its efforts, the Task Force also deliberated on renegotiating tariff structures after assessing the commercial and operational sustainability of 14 wind power plants and one solar power plant operating under the Power Policy 2006. READ MORE: Govt investment in DISCOs’ equity: ECC clears Rs200bn TSG Wind power plants operating under the Upfront Tariff 2013 and cost-plus tariff regime till 2018 have comparatively higher tariffs—up to Rs 42 per unit—compared with those installed after 2018 under the revised cost-plus regime, where tariffs are around Rs 17 per unit. Accordingly, the Task Force adopted different negotiation strategies based on tariff levels and held multiple rounds of discussions with wind power companies, successfully renegotiating tariff components aimed at reducing future liabilities. Wind Power Plants under Upfront Tariff 2013: Three wind power plants under this regime agreed to the following principles upon expiry of the debt repayment period: (i) fixation of Return on Equity (RoE) in Pakistani rupees at the exchange rate prevailing on the debt repayment expiry date; (ii) reduction in the operation and maintenance (O&M) component along with rationalisation of its indexation mechanism; (iii) reduction in the cap on the insurance component; (iv) waiver of Late Payment Interest (LPI); (v) reduction in the future delayed payment rate; and (vi) payment of outstanding dues by the power purchaser within 90 days of the effective date of the agreement. Based on these principles, amendment agreements have been signed with the wind power plants, resulting in estimated savings of Rs 38.90 billion over the life of the projects. Wind Power Plants under Cost-Plus Tariff after 2018: Eleven wind power plants operating under the cost-plus tariff regime agreed to the following terms: (i) RoE to be fixed at the exchange rate prevailing on the debt repayment expiry date; (ii) waiver of outstanding LPI as of the effective date; (iii) reduction in the future delayed payment rate; and (iv) settlement of outstanding payables by the power purchaser within 90 days. These amendment agreements are expected to generate estimated savings of Rs 78.63 billion over the life of the projects. Quaid-e-Azam Solar Power (Pvt) Ltd: Quaid-e-Azam Solar Power (Pvt) Ltd (QASPL), wholly owned by the Government of Punjab, has initialled an amendment agreement under which: (i) RoE will be fixed at 13 percent at a reference exchange rate of Rs168 per dollar, in line with other government power plants; (ii) the indexation mechanism for the O&M component will be rationalised; and (iii) the future delayed payment rate will be reduced. According to the Power Division, LPI waivers have been negotiated with all government power plants, and in the case of this solar project the waiver will help reduce the circular debt burden. The Task Force recommended that since all GPPs have waived LPI, the outstanding LPI payable to QASPL as of July 16, 2025 should also be waived and incorporated in the amendment agreement. These amendments are expected to yield savings of Rs 45.70 billion over the life of the project. Fauji Kabirwala Power Company Limited: The Federal Cabinet had earlier approved an initialled amendment agreement with Fauji Kabirwala Power Company Limited (FKPCL) on January 14, 2025. During reconciliation of liquidated damages (LDs), it was observed that certain penalties arose due to non-supply of gas/RLNG during the 16th agreement year, which constituted an event beyond the company’s control and could be treated as an “Other Force Majeure Event,” consistent with industry practice. In light of this, the Task Force proposed revisions to the earlier agreement to ensure a fair and conclusive settlement of outstanding matters and recommended the revised amendment agreement for Cabinet approval. The Power Division, in its summary, requested the ECC to authorise the Central Power Purchasing Agency-Guaranteed (CPPA-G) to make payments to government power plants from the circular debt financing facility to settle outstanding payables—excluding LPI—up to the maximum amount outstanding as of December 10, 2025. The summary was circulated on December 31, 2025 to various ministries and organisations including the Finance Division, CPPA-G, PPIB, NEPRA, Petroleum Division, FBR, Law and Justice Division, ISMO, PPMC, PAEC, NPPMCL and the Government of Punjab for comments. Most stakeholders supported the proposals without adverse comments. However, the Finance Division highlighted that some proposals could result in lower dividends for the government, while the NPPMCL expressed concern that certain financial adjustments could adversely affect the value of its shares. Despite these reservations, the Power Division maintained that the proposals would deliver broader economic benefits and help reduce circular debt. The division emphasised that structural reforms are being pursued to rationalise consumer tariffs, improve sector efficiency and address the mounting circular debt burden. It added that the waiver of LPI would directly reduce the circular debt stock, as envisaged in earlier Cabinet approvals related to bank financing. After deliberations, the ECC approved several proposals, including: approval of amendment agreements with 14 wind power plants and one solar power plant; waiver of LPI receivable by Quaid-e-Azam Solar Power; authorisation for CPPA-G to file tariff adjustment applications before NEPRA; approval of a revised amendment agreement with Fauji Kabirwala Power Company Limited; one-time payments to Atlas Power Limited; early termination of agreements with Altern Energy Limited; and waiver of LPI receivable by government power plants, including nuclear power plants. The accrued LPI up to December 10, 2025 will also be waived upon verification by the power purchaser, with the waiver to be netted off against any LPI payable to SNGPL. Copyright Business Recorder, 2026