Engro Powergen, CPPAL enter into binding agreement

Engro Powergen, CPPAL enter into binding agreement

KARACHI: Engro Powergen Qadirpur Limited (EPQL) and Central Power Purchasing Agency (Guarantee) Limited (CPPAL) have entered into binding agreement for the fixation of power purchase rate and release of outstanding amount to the Independent Power Producer (IPP), a statement said on Monday.

The EPQL shared a communication with the Pakistan Stock Exchange (PSX) informing that on August 17, 2020, it had announced to enter into a Memorandum of Understanding (MoU) dated August 12, 2020 with Committee for negotiations with Independent Private Power Producers notified by the Government of Pakistan, in line with the understanding reached in the MOU, EPQL and Central Power Purchasing Agency (Guarantee) Limited (CPPAL).

The parties will now enter into a binding agreement based on the terms of the MOU, which include inter alia: that all undisputed outstanding amounts due and payable to EPQL under the power purchase agreement, as on November 30, 2020,will be paid in two instalments (each instalment comprising of one-third cash and two-thirds government issued PIBs and Sukuks).

Further, in the larger national interest, EPQL has agreed to (prospectively) accept a reduction in the tariff component, whereby the Return on Equity (“RoE”) and the Return on Equity During Construction (“RoEDC”) will be fixed at 17 percent per annum in PKR (on NEPRA approved equity at Commercial Operation Date for RoE and RoEDC, calculated at USD/PKR exchange rate of PKR 148/USD, with no future USD indexation (“Revised ROE and ROEDC”).

However, the existing RoE and RoEDC, together with the applicable indexations, shall continue to be applied until the date when the applicable exchange rate under the present Tariff reaches PKR 168/USD 1 (i.e. the date of the signing of the MoU), whereupon the Revised RoE and RoEDC shall become applicable and shall apply for the remainder of the Term of the power purchase agreement.

Upon notification of Tariff Determination by NEPRA, first instalment of 40 percent shall be paid to EPQL and the remaining 60 percent shall be paid within six months after the date of the first installment.