Payment dispute with SNGPL: LDPL serves notice of force majeure under PPA

ISLAMABAD: M/s Liberty Daharki Power Limited (LDPL) has served notice of force majeure under Power Purchase Agreement (PPA) due to payment dispute on supply of gas by Sui Northern Gas Pipeline Limited (SNGPL).

The power company communicated cessation of Other Force Majeure Event (OFME) to CPPA-G through cessation of OFME letter. However, despite sharing of CPPA-G payment plan with the SNGPL and personal follow-ups with their management, the SNGPL has again suspended gas supply by giving instructions to the Plant Manager, Qadirpur Field vide SNGP Gas Suspension Letter.

In view of the current situation the company has reproduced Section 2.8 of the Settlement Terms which is annexure B to the PPA Amendment Agreement executed on 15 October 2021, as follows:

“Further understandings: The Parties further agree and declare that outside of any OFME period, any future outage or failure or interruptions to the complex’s generating capability and/or failure to deliver Net Electrical Output on account of non-supply of fuel by any of the Fuel Suppliers shall: (1) release the Company from any obligation to use backup fuel, (2) not to be treated as a Forced Outage/Partial Forced Outage under the PPA; and (3) be treated as an Other Force Majeure Event under the PPA.”

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The company argued that now the performance of the Company to operate the Complex and to discharge its contractual obligations under PPA have been constrained on account of suspension of gas supply by the gas supplier, which is beyond the reasonable control of the Company, and as a consequence thereof, the company has declared Other Force Majeure Event under Section13.1(c) with effect from 14:15 hrs of March 17, 2023.

According to the company upon declaration of Force Majeure, the Company shall be excused from the performance of its obligations under the PPA and shall not be liable for any failure in performing such obligations till such time the gas supply is restored by the SNGPL.

The power company has emphasized here that while the cause of OFME stems from delay in payments by CPPA-G, the LDPL and power consumers are left to suffer the consequences. “We therefore urge you to kindly take up the matter of payment plan directly with the SNGP as they are not convinced with the recent plan provided by CPPA-G,” was the company’s plea.

Copyright Business Recorder, 2023