ISLAMABAD: Power Division is likely to seek federal cabinet's nod next week on the draft agreements already "initialed" by the representatives of both the GoP and nearly two dozen Independent Power Producers (IPPs), well-informed sources told Business Recorder.
The payment to be made to these plants will be around Rs 150 billion, with consensus not yet evolved with other power companies. However, talks between GoP team and Chief Executive Officer (CEO), Hub Power Company (Hubco), Khalid Mansoor are scheduled for Friday(today) aimed at finding a way forward to resolve a dispute of Rs 10 billion.
The payment to be made to specific power companies would be in the following two installments: (i) Kot Addu Power Company (Kapco), Rs 100 billion, of which 60 per cent share is of Water and Power Development Company (Wapda);(ii) Hubco, Rs 60 billion, sans an amount of Rs 10 billion which is under litigation;(iii) Lalpir Power Limited/ Pak Gen., Rs 30 billion, (iv) Rousch, Rs 14 billion, (v) Orient, Rs 7 billion, (vi) Atlas Power, Rs 16 billion and (vii) Hubco( Narowal), Rs 16 billion.
The representatives of IPPs held a meeting with the Finance Minister, Dr. Abdul Hafeez Shaikh, who is heading the Implementation Committee, on January 27, 2021 and shared their views on the mode of payment.
According to the agreed mode, payments would be made in 2 Installments. First installment of 40% will be around Rs 180 billion - 1/3 in cash, 1/3 5-year Sukuk and 1/3 10-year PIB and will be cleared next month. The second installment of 60% - Rs 270 billion, of which 1/3 will be in cash, 1/3 10-year Sukuk and 1/3 10-year PIB. Second installment will be made in August or September this year. The sources said, though IPPs have some reservation on value of PIBs, the government has made it clear that taxation on holding PIBs/Sukuks would not be exempted due to international restriction on tax exemptions. Alternatively, Government has changed 1/3 instrument into Sukuk so that loss is minimized.
However, for sales tax the matter of payment mechanism is to be as per satisfaction of IPPs.
The sources said, PIB coupon rate will be weighted average yield of T-Bill + 70 bps whereas Sukuk/PIB will be floating rate. State Bank of Pakistan and Ministry of Finance (MoF) will sit together with leading banks minimize any loss due to sale of PIBs. The receivables will be adjusted at par value of PIB/Sukuk.
"We are planning to present initialed agreements of around 24 IPPs before the Federal Cabinet next week for final nod so that payment is made to them as per commitment," confirmed a senior official. The authorities stated that cases of those power companies, which are not ready to sign the agreements immediately, or have some other thinking, will be considered later.
Copyright Business Recorder, 2021
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