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Tag: independent power producers

  • Payment to 12 IPPs withheld for NAB cases

    Payment to 12 IPPs withheld for NAB cases

    ISLAMABAD: Economic Coordination Committee of the Cabinet (ECC) has approved payment of first installment to 35 Independent Power Producers (IPPs) out of total 47 whereas payment to the remaining 12 IPPs (under Power Policy 2002) may be withheld owing to the NAB investigation.

    Federal Minister for Finance and Revenue Shaukat Tarin chaired the meeting on Wednesday. Power Division presented a summary before the ECC regarding release of first installment of payment to IPPs.

    Secretary Power Division briefed the Committee about the recommendations of the sub-committee constituted during ECC last week.

    “The ECC approved payment of first installment to 35 IPPs out of total 47 whereas payment to the remaining 12 IPPs (under Power Policy 2002) may be withheld owing to the NAB investigation,” according to as statement.

    Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Interior Shaikh Rashid Ahmad, Federal Minister for Economic Affairs Division Omar Ayub Khan, Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Muhammad Hammad Azhar, Federal Minister for Industries and Production Makhdum Khusro Bakhtyar, Federal for National Food Security & Research Syed Fakhar Imam, Federal Minister for Maritime Affairs Ali Haider Zaidi, Adviser to the PM on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Finance and Revenue Dr. Waqar Masood, SAPM on Power & Petroleum Tabish Gauhar, Federal Secretaries, Chairman BOI and other senior officers participated in the meeting.

    Governor State Bank of Pakistan Reza Baqir also joined through a video link.

    Secretary Power gave a detailed briefing to the Committee regarding a draft summary for approval of arrangement for providing additional power from NTDC to K-Electric since April 2020.

    The Secretary Power also raised the issue of non-payment for the additional power supply by K-Electric to Power Division.

    After Detailed discussion, the ECC constituted a Sub-Committee comprising Federal Minister for Planning, Federal Minister for Energy, Federal Minister for Maritime Affairs and SAPM on Power to be headed by the Finance Minister to negotiate with the Karachi Electric for settlement of payment dispute amicably.

    Power Division placed a summary before the ECC regarding tax on payments to the offshore supply contractors of Independent Power Producer(s) located in AJ&K.

    The ECC considered and approved the summary to facilitate swift processing of such projects due to its strategic importance.

    The ECC considered and approved a summary tabled by the Ministry of Industries and Production regarding exemption from duties and taxes for import of oxygen gas, oxygen gas cylinder and cryogenic tanks by oxygen concentrators / Generators / manufacturing Plants under respective Harmonized System (HS) codes for a period of 180 days to cope with the increased requirement of oxygen during the third wave of COVID-19 in the country.

    Ministry of Commerce presented a summary regarding implementation of United Nations Security Council Resolutions (UNSCRS) through export Policy Order, 2020 and Import policy Order, 2020.

    The ECC considered and approved the summary.

    Lastly, Power Division presented a summary before the Committee regarding retargeting of power sector subsidies for electricity consumers during phase-I in consultation with Ehsaas and Finance Division. The ECC approved the summary, in principle, with a direction to work out modalities for future course of action.

  • Engro Powergen approves revised IPPs-government MoU

    Engro Powergen approves revised IPPs-government MoU

    KARACHI: The Board of Directors (BOD) of Engro Powergen Qadirpur in a meeting held on Monday approved the revised terms of Memorandum of Understanding (MoUs) between Independent Power Producers (IPPs) and the government.

    The company in a letter sent to Pakistan Stock Exchange (PSX) informed that the Committee for negotiations with Independent Private Power Producers (“IPPs”), notified by Government of Pakistan (the “Committee”) and the IPPs representing the 2002 Power Policy projects, had several rounds of discussions in which the Committee had requested the IPPs to provide concession to the government which concession shall be passed on in the form of relief to the citizens of Pakistan.

    The IPPs have reached an understanding with Committee to alter their existing contractual arrangements in the larger national interest, to the extent of, and strictly with respect to, the matters listed under the MoU signed between the Parties on August 13, 2020.

    The terms of the MoU are subject to the approval of National Electric Power Regulatory Authority (NEPRA), Federal Cabinet, IPPs’ Board of Directors, other necessary corporate approvals and execution of the final agreement between the relevant parties.

    The Board of Directors of the Company in their meeting dated August 17, 2020 have in-principle approved the terms of the MoU.

    The Parties have, inter alia, reached an understanding that;

    — Return on Equity including Return on Equity During Construction shall be changed to 17 percent per annum in PKR on NEPRA approved equity at Commercial Operation Date of the Company calculated at USD/PKR exchange rate of PKR 148/USD, with no future USD indexation;

    — fuel and O&M shall be taken as one consolidated line item and any future net savings shall be shared 60:40 in favour of the power purchaser and Company respectively, after accounting for any reserves created, or to be created for major overhaul if the reserve for major overhaul remains unutilized, it shall be shared in the ratio of 60:40 between the power purchaser and the IPP, respectively;

    — Delayed Payment Rate (DPR) under the Power Purchase Agreement shall be reduced to KIBOR + 2 percent for the first 60 days after the due date, and thereafter at KIBOR + 4.5 percent as per the Power Purchase Agreement. Delayed Payment rate of fuel supplier will also be adjusted accordingly. In order to assess if a company has made any excess profits, the reconciled numbers between the Committee and Company, shall be submitted to NEPRA who shall hear and decide this matter in accordance with the 2002 Power policy, tariff determination and Power Purchase Agreement.

    Moreover, the Government of Pakistan shall actively support the creation of competitive power markets.

    All projects shall convert their contracts to Take and Pay basis, without exclusivity, when Competitive Trading Arrangement is eventually implemented and becomes fully operational.

    The parties have agreed that payment of the receivables of the company are an integral part of the MoU. The Power Purchaser and the government will devise a mechanism for repayment of the outstanding receivables with agreement on payment of receivables within an agreed time period, which will be reflected in the final/definitive agreement to be signed, post shareholder approval.

    Any understanding in relation to the definitive agreement will be disclosed as and when an agreement has been reached between the relevant parties, the company said.

  • IPPAC rejects allegations of power sector losses

    IPPAC rejects allegations of power sector losses

    KARACHI: Independent Power Producers Advisory Council (IPPAC) has rejected the allegations of power sector losses made through the inquire committee’s report submitted to the prime minister.

    In response to the recent reports appearing in media on the Inquiry Committee’s Report (Report) over alleged losses in the Power Sector, the IPPAC categorically rejected the allegations being attributed to such report.

    The reports appearing in the media makes unsubstantiated allegations against the Independent Power Producers (IPPs), accusing them of having unfair agreements, and misappropriation in tariff and fuel consumption rates.

    “Neither the IPPAC nor any IPP was consulted or approached in preparing of the Report or its contents. The allegations being levelled on the IPPs are ill-conceived, unfounded, baseless and disappointing, which is causing serious damage to our reputation.”

    The IPPs have given their sweat and blood for the development of Pakistan at a time when no one was willing to invest in the country. The IPPs have empowered an uncertain economy, which had not witnessed such a sizeable quantum of Foreign Direct Investment ever in the past, it said.

    It is important to highlight that while the Government has not paid the IPPs for years, and IPPs are at the brink of default being owed an amount of approximately Rs. 600 billion, they still continue to remain available to provide uninterrupted supply of electricity for the country, always keeping the greater national interest at the forefront.

    Previously, nine IPPs had already given a lot of relaxations to the Government in the form of a Settlement Agreement, keeping in mind the national interest. Yet it was the Government that has been unable to obtain formal approval(s) to implement the same; hence that opportunity has been lost.

    The settlement agreement was consented to by such IPPs that had won the Arbitral Award by the London Court of International Arbitration (LCIA) in 2017 for the recovery of unpaid capacity payments, which had been deducted in contravention of legally valid and binding Power Purchase Agreements.

    It is important to remember that similar witch-hunting exercises in the past have caused immense damage to the investment climate and economic prospects of the country, and if we do not learn from the past mistakes, it will again lead to the same negative results.

    The IPPs have always remained available to engage in a meaningful dialogue with the Government to discuss and find an amicable solution to the most pressing needs of the country.

    In the prevalent conditions, given the COVID-19 Pandemic, the IPPAC and IPPs stand ready to do their part to help the Pakistan economy and nation during this time of need, in addition to providing uninterrupted power supply.