Government-IPP out-of-court settlement agreement in limbo

The out-of-court settlement agreement between Independent Power Producers (IPPs) and Government of Pakistan (GoP) is in limbo as the committee headed by Minister for Economic Affairs, Hammad Azhar has not finalised its report on M/s Rouch Power, owned by Prime Minister's Advisor on Commerce Razzak Dawood, well-informed sources told Business Recorder.

The sources said settlement agreements will be signed with Altas Power, Attock Gen Ltd, M/s Rouch Power, Halmore Power, Naowal Energy, Liberty Power Tech, Nishat Chunian, Orient Power, Saif Power and Saphire Electric.

According to sources, pursuant to the Prime Minister's directive for the resolution of issues with IPPs several meetings were held between the Power Division and the representatives of IPPs. The discussions have led to development of a commercial understanding document.

The document developed represents an amicable solution to outstanding issues to avoid prolonged litigation as well as arbitration thereby curtailing costs and burden on the national exchequer; additionally it envisages adoption of proceedings which shall promote a healthy and viable structure of the national power sector, sources revealed. The parties recognize the need to resolve any and all outstanding issues in an amicable manner.

The ECC had approved an agreement between the GoP and M/s Rouch to settle the dispute out of court and waive off Liquidated Damages (LDs) but when the media criticized the decision, the federal cabinet sent the case to a committee headed by Minister for Economic Affairs to prepare recommendations for the Cabinet.

In case, the agreement is signed, the government will get financial benefit of Rs 18 billion besides resolution of a long-standing dispute which is harming Pakistan's image at the international level but the Hammad-led committee has so far failed to finalise its recommendations.