PD withdraws summary seeking non-payment of dues to IPPs

ISLAMABAD: In a new development, the sanity has prevailed as the Power Division has withdrawn the summary from the ECC, which it earlier pitched asking for stopping the dues payment to the IPPs installed in 2002 unless the NAB completes its probe against ‘some power plants’. It had also asked in the summary for halting the process of making arbitration court to resolve Rs 55billion excess profits till the completion of the NAB probe.

The withdrawal of the summary has taken place when the Power Division feels the heat from ‘powerful circles’ which played a pivotal role in getting the discounted tariff from 47 IPPs with an impact of Rs 836 billion in next 20 years. The summary prepared by the Power Division has put the IPPs and the government negotiation team having representation from ‘powerful circles’ in state of utter shock as 47 IPPs had volunteered to bailout the govt while offering alteration in their power purchase agreements (PPAs).

However, this correspondent time and again contacted Special Assistant to PM on Power Tabish Gauhar and sent him a questionnaire about the rationale of pitching before the ECC the summary of the Power Division, asking for non-payments to the IPPs and holding in abeyance the process of arbitration court, but he didn’t respond.

The chief executive officers (CEOs) of many Independent Power Plants (IPPs) installed under the Power Policy 2002, however, while talking to The News, said they still have the right to move the London Court of International Arbitration (LCIA) if the government adopts a discriminatory policy while paying the dues of 403 billion in two installments. “The payment of 40 per cent of dues as a first installment is very much operative part of the agreement finalized with the government and if it does not pay or it is linked with completion of NAB probe about some ‘unscrupulous’ IPPs over making illegal profits, the revised agreements will be deemed null and void.” The CEOs said that until the government pays 40 per cent amount of dues of 403 billion, the revised deals will not be effective, and the status quo will continue. And if the govet pays the dues to the IPPs installed under other power policies and they (IPPs under Power Policy 2002) are not paid, they will have the right to move to the LCIA. The IPPs said it is the government and its negotiation team which agreed that a local arbitration would be formed to resolve the issue of excess profits of Rs 55 billion. “Now the Power Division’s attempt to stop dues payment and halt the process of constituting the local arbitration court is just like a back-out from the revised agreements which are awaiting their implementation.” The CEOs argued that MoUs and Master Agreements have already been approved by the CCOE, the ECC and the federal cabinet but now the Power Division is jeopardizing whole process.

Sources said that out of 47 IPPs, 30 IPPs have signed the revised contracts, but out of 30, IPPs installed in 2002 are being denied payment of their dues which is tantamount to scratching down the whole exercise to attain the discounted tariff from the IPPs in a bid to make the power sector sustainable. However, 17 wind IPPs have refused to sign the amended PPAs as the foreign lenders of the said IPPs want power plants installed under the CPEC umbrella to first sign the revised contracts.

The foreign lenders of 17 wind IPPs want the government to brief them about the reform programme in the power sector and steps to make the power sector of Pakistan sustainable and secondly want the government of Pakistan to get the discount in tariff from the IPPs set up under the CPEC, a senior official privy to the latest development told The News. The official said the authorities have told them that the reforms package in the power sector that has been shared with the World Bank will be shared with foreign lenders and they are ready to brief them on this front. The 17 wind IPPs that are showing resistance in assigning revised PPAs include FFC Energy, Zorlu Energji, Foundation Energy-1, Foundation Energy-II, Sapphire Power, Yunus Energy, Metro Power, Tenaga Energy, Master Energy, ACT Wind, Gul Ahmad Energy, Artistic Energy, Hawa Energy, Jhimpor Power, Tricon Boston Consulting-A, Tricon Boston Consulting-B and Tricon Boston Consulting-B.

The government has already worked out the dues of 47 IPPs at Rs 403 billion that it will pay in two installments. And out of Rs 403 billion, the government is to pay Rs 41.096 billion to 17 wind IPPs.