KAPCO Joins the List of IPPs to Sign Agreements with CPPA

Kot Addu Power Company Limited (KAPCO) and the Central Power Purchasing Agency Limited (CPPA) have initialed a Master Agreement and an amendment to Power Purchase Agreement, according to a notification issued to the Pakistan Stock Exchange (PSX).

The agreements have been initialed on behalf of the Water and Power Development Authority (WAPDA), the notification said.


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The Company and WAPDA have entered these agreements in furtherance of the Memorandum of Understanding (MoU) executed on August 19, 2020, between the Company and the Government Committee for Negotiation with the independent power producers (IPPs).

These Agreements have been initialed by KAPCO, on the request of the Government of Pakistan, in the larger national interest and to maintain the sustainability of the power sector, said the notification.

The initialed terms of these agreements are, inter alia that the existing capacity payments and variable O&M shall be reduced by 11 percent, USD exchange rate and US CPI indexations shall be discontinued on 50 percent of the reduced capacity payment (which shall be locked at National Bank of Pakistan’s TT/OD selling PKR/USD exchange rate of Rs. 168.60/USD without any local or international currency indexation or inflation adjustment for the future and the US CPI of August).

The terms of the agreement also include that the USD exchange rate and US CPI indexations on a reduced variable O&M and 50 percent of the reduced capacity payment shall continue as per existing arrangement; without prejudice to the terms of its generation license, the Company will have the option to participate in the Competitive Trading Arrangement, when it is implemented and becomes fully operational.

Subject to agreement on the terms and conditions and completion of legal and corporate formalities, the Power Purchaser shall consent to the extension of the PPA for an additional term, following the expiry of the Term of the PPA.

The payment of outstanding receivables of the Company will be made in two tranches of 40 percent and 60 percent respectively through cash and financial instruments; if the Power Purchaser makes default in payment (with a cure period), the discounts given in capacity payments and variable O&M shall be suspended.


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It is also contemplated that in the future the Company, WAPDA, and CPPA-G may enter into a novation-agreement to novate the rights and obligations of WAPDA under the Power Purchase Agreement to CPPA-G.

The final terms (in the present or amended form) of these Agreements and their execution are subject to receipt of requisite approvals, including inter alia the approval of the Federal Cabinet, the Company’s Board of Directors, its Shareholders and also possible regulatory approvals.

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