The Pakistan government has recently issued notices of intent to cancel contacts with a number of independent power producers (IPPs) which are operating or in the process of developing power projects in the country. These actions are part of a government policy to try and force the companies to reduce their tariffs.

The companies affected include the US based AES Corp. Two AES subsidiaries, AES Lal Pir and AES PakGen have received Notices of Intent to Terminate. AES Lal Pir is a 351 MWe oil-fired plant in Punjab, while AES Pak Gen is a 344 MWe oil-fired development adjacent to Lal Pir.

The notices issued to the two projects assert that the IPPs made inaccurate anti-corruption representations to the government. AES has denied these allegations and has indicated its intention to fight the notices. Meanwhile, the two projects have continued to operate, selling power to the Water and Power Development Authority (WAPDA) which continues to meet its financial obligations.

Two projects involving Coastal Power were also in receipt of Notices of Intent to Terminate. These are the Habibullah Coastal Power (Private) Co and Saba Power Company (Private) Ltd. The notices allege unspecified charges of corruption involving invoicing and unlawful commissions, a failure to maintain correct accounts and a violations of the laws of Pakistan, Coastal said. The company denies the allegations which it, too, intends to fight.

The Canadian utility BC Hydro is involved in a further project, called Raiwind, which is subject to cancellation. Meanwhile the Hub Power Co is appealing to the International Court of Arbitration over a dispute with WAPDA. The dispute involves an attempt by the government to impose a tariff reduction on the company in contravention of an existing power purchase agreement.