The first, of course, is that the government is setting a bad precedent by effectively breaking multi decade agreements by forcing the power companies into renegotiation. The problem of bad precedentsThe biggest problem with forcing the power companies to renegotiate their contracts is the precedent they set. Thirdly, the contracts set a guaranteed rate of return built into the contracts so that there would not have to be constant renegotiations and disputes over what price the IPP could charge. For instance, the government had planned the privatisation of the state-owned Havelli Bahadur Shah and Balloki power plants. Those power plants have been extremely expensive to set up because the Chinese companies selling the coal-fired power plants have been price gouging Pakistani companies.

Source: Pakistan Today September 27, 2020 20:26 UTC