Plan to transfer power purchase agreements to NTDC dropped

The government has dropped the plan to transfer Power Purchase Agreements (PPAs) from Wapda to National Transmission and Dispatch Company (NTDC) after persistent refusal by the Independent Power Producers (IPPs), official sources told Business Recorder.
"We have decided to purchase power from IPPs through Central Power Purchase Agent (CPPA) of Wapda which does not require any amendment in existing PPAs," the sources added.
According to the power sector corporatisation plan, it was agreed both by the government and the World Bank (WB) that PPAs with the IPPs would be transferred from Wapda to NTDC but the IPPs refused to sign the agreements without prior approval of their respective lenders, the sources maintained.
The sources said that Wapda Power Privatisation Organisation (WPPO) had sought IPPs consent but their response was not positive, citing reasons that they have to consult their respective lenders.
The World Bank team which is reaching Islamabad on July 25 to hold negotiations for 1.5 billion dollar for three years (2006-08) indicative investment programme had also conveyed dismay over the slow progress on the issues of lenders' consent to transfer loans to corporate entities, sources further said.
The Economic Affairs Division (EAD) which was responsible for dealing with international donors had received go-ahead signal from the World Bank, Islamic Development Bank (IDB) and Japan Bank for International Co-operation (JBIC) but Asian Development Bank was still resisting the proposal, saying it would not agree on the revised agreement until the issue of 'negative pledge' is resolved.
The sources further said that power sector restructuring programme which had been launched by the government about five years back has yet to be completed as progress on some of the major issues including transfer of loan liabilities was nil.
Minister for Water and Power Liaquat Ali Jatoi and Secretary Ashfaq Mahmood held several meetings with the concerned organisations but the pace of progress on the remaining issues including shifting of Pepco office from Lahore to Islamabad was not satisfactory, the sources maintained.
A couple of weeks earlier, Jatoi also directed the Ministries of Finance and EAD to submit a detailed report on transfer of loan liabilities with consensus of the Law Division and the Privatisation Commission for approval as the World Bank was pressurising for early settlement of this issue.
"Tariffs notifications for Discos and timely execution of Wapda's corporatisation are essential for achieving the full benefits, which the reform programme was expected to deliver," the World Bank said in a letter to the Minister for Water and Power, which was written before a meeting between the Prime Minister Shaukat Aziz and bank's Country Director John Wall.