Islamabad: According to a news source, 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 the terms of the deal, the government would pay tariff subsidies on time and KE would clear its power bills using standby letters of credit (SBLC).
Previously, the deal with the energy company stated that 650MW would be provided to Karachi residents. In a similar event, the government has agreed to sign a new agreement under which the ministry of finance will be responsible for paying a market-based mark on late subsidy payments.
Furthermore, the KE will provide SBLCs backed by an escrow account to ensure that the Central Power Purchase Agency (CPPA) receives automated payments for monthly bills associated with KE’s power supply. The arbitration will be used to settle the outstanding payables and receivables.
Both parties have agreed to meet again to sort out the details of the agreement and address the concerns of individuals affected. Asad Umar, the Minister for Planning and Development, also acknowledged that long-standing conflicts over payables and receivables have been resolved in order to move forward with the power supply to Karachi residents.