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Pakistan has authorised a second batch of IPPs

The second payment to IPPs in lieu of overdue receivables has been approved by the federal government. The Cabinet’s decision would pave the way for the distribution of PkR134 billion to IPPs.

This comes after the IPPs received their first payment of PkR89.8 billion in June of this year (of which PkR30 billion was paid in cash), bringing the total payments made under the tariff re-negotiation agreement to PkR225 billion.

Also read: The ECC approves the second tranche of PKR 135 billion to IPPs under the PSO

According to press sources, the funds are set to be distributed to IPPs by December 3, with HUBCO receiving PkR34.8 billion, KAPCO PkR59.4 billion, Rousch Power PkR8.5 billion, Fauji PkR2.6 billion, PakGen PkR9.8 billion, and Lalpir PkR9.3 billion. A second PkR6bn will be shared by KEL, Saba Power, and FFC.

While the details of the structure of the 2nd tranche are scant, we expect the GoP to structure the transaction such that only a partial payment is made in cash while the remaining payments will be made in kind (through PIBs and Sukuks).

Also read: Muller & Phipps Pakistan’s collecting services will be digitalized faster thanks to Meezan Bank

As seen in the immediate aftermath of the last settlement where the IPPs announced a dividend payout (HUBC PkR5.0/sh and KAPCO 3.5/sh), second tranche of the settlement may again trigger a dividend payment from these IPPs which may bring them in limelight again.

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