ISLAMABAD: The federal government on Wednesday shared no concrete plan of due payments to Independent Power Producers (IPPs), in lieu of agreements, saying that the country is passing through difficult times with debt and the IMF obligations having to be kept in mind.
This was the crux of meeting between Secretary Finance, Naveed Kamran Baloch and the representatives of the IPPs.
Well-informed sources told Business Recorder that IPPs argued that they compromised their strong legal positions on the hope that they would be getting their “due full amounts.”
The Secretary Finance, however, stated that he had come to the meeting to reassure all IPPs not to worry, telling them that the government was serious and was honour the commitments but did not share the how and when with IPPs.
"The Nation is passing through difficult times, debt and IMF obligations have to be kept in mind and we need to cooperate in the greater national interest," the sources quoted the Secretary Finance as saying.
However, IPPs were dissatisfied with the verbal assurance of the government, which has yet to make any concrete offer.
"Strange they called all IPPs to say don't panic and trust GoP. How and when they will pay there’s no clue," one of the participants told this newspaper.
On December 1, 2020 Dr Hafeez Shaikh the then Advisor to the Prime Minister in Finance who was appointed as Federal Finance Minister on 11 December, in his capacity as Chairman of the committee constituted for negotiating with IPPs chaired a meeting. Minister for Energy, SAPM on Power and other members attended the meeting. All the participants and Secretary Power Division shared a progress update. Secretary Power Division shared that two sub-committees have been constituted for finalizing a payment mechanism and converting MoUs into agreements.
Both the committees have initiated the activities. The SAPM on Power is leading sub-committee only devising a payment mechanism and Babar Yaqub Fateh Mohammad is leading the committee for converting MoUs into binding agreements.
Babar Yaqub Fateh Mohammad while participating in the discussion highlighted the key concerns raised by IPPs during negotiations. IPPs are underscored the need for a pledge by the federal government with regard to timelines for clearance of their outstanding dues. He further shared that senior level participation at government level will help develop confidence and may lead to better negotiations. He said that senior level government participation has been missing in the meetings with the IPPs and such lack of interest may negatively impact on the outcome.
Secretary Power Division said he and his Additional Secretaries will be available for all meetings of the committee within the realm of physical possibility. He further apologized for not being fully available earlier owing to his other important official engagements.
Dr. Hafeez Shaikh recommended that the outcome of the sub-committee meetings may be formalized and may be shared with the main committee on a regular basis. The SAPM on Power shared that draft addendum to PPA as draft agreement has been shared with IPPs; however, IPPs are looking for clear indication of payment plan.
While discussing the possible way forward on devising a payment mechanism, Dr Hafeez Shaikh stated that the committee led by the SAPM Power may immediately work out the possible way forward. The way forward will help provide confidence to the other side/IPPs. In this regard, if required, the sub-committee may interact with Finance Secretary and Governor SBP for options to move ahead.
After a detailed discussion it was decided that the Committee on payment mechanism may immediately-work out possible way forward and various payment options. In this regard, committee may seek assistance of any technical expert and submit a payment mechanism which give confidence to IPPs during negotiations. Such Plan will be taken up with Cabinet for its assent which can later be shared with IPPs.
The payment mechanism may include clarity on the following aspects: (i) determine final amount to be settled/paid to IPPs; (ii) propose payment installment if required; (iii) give precise day/date for 1st installment; (iv) give precise days/dates for subsequent installments; (v) give mechanism for subsequent installments and; (vi) clarity on whether offer shall be uniform for all IPPs or otherwise.
With regards to the committee on converting MoUs to binding agreements, the subcommittee will expedite the negotiation process and the same committee shall also engage with the remaining 6 IPPs that have not signed the MoUs yet. The committee will take necessary measures to persuade them to directly negotiate agreements. Secretary Power Division will ensure senior level representation of Power Division during the negotiations with IPPs. The sub-committees may hold internal meetings for the relevant tasks and present report/proposals before the Committee by the end of the current week.
Copyright Business Recorder, 2020
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