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ISLAMABAD: Ministry of Energy (Power Division) said on Monday that payment of Rs 85 billion-first installment of agreed amount to the Independent Power Producers (IPPs), established under the pre-1994 Power Policy and the 1994 Power Policy was due on March 29, 2021 but the process has been put on hold due to a National Accountability Bureau (NAB) notice.

Power Division has written a letter to NAB, requesting anti-graft body to go through all the agreements and other available documents and issue a ‘clean chit’ before the payment is made to the IPPs to avoid any investigation in future. The last day for making payment was March 29, 2021. GoP had pledged to pay within 30 business days from February 11, 2021 when the agreements were signed.

NAB has asked for provision of record and present status of MoU / agreement signed and final negotiations between IPPs and GoP under section 19 of the National Accountability Ordinance 1999.

“We were supposed to pay Rs. 85 billion to Hubco, KAPCO, and the 1994 Policy IPPs on March 29, 2021, however, due to NAB's notice, that process is currently under hold. As per our agreement with these IPPs, we have 70 additional days to make this payment before the agreement is terminated which we don't think would happen,” said the Power Division.

According to sources, Power Division believes that any step taken in haste can create troubles for the concerned officials in future; that is why all possible legal procedures are being fulfilled.

Clause 5 of the agreement says ‘’in the event of any default by the Power Purchaser (CCPA-G) under this amendment, the Company shall suspend giving tariff discount from the date of default; provided, however, if such default in not cured within a period of seventy days, the company shall have the right to terminate this amendment by seven days’ notice, with no rights and obligations of either party arising out of the termination of this Amendment. Termination of this amendment shall not affect the accrued rights of the parties. Clause-9 shall continue in force after termination and shall continue in effect and be binding upon the parties.’’

Earlier, Power Division had submitted a summary to the Economic Coordination Committee (ECC) urging it to stop payments to the IPPs established under the Generation Policy 2002 until National Accountability Bureau investigation against them is completed.

According to the contracts, the Federal Government pledged to pay 40 per cent - Rs 400 billion to the IPPs no later than 30 working days starting from February 11, 2021, after excluding holidays.

“We are expecting that NAB will send its opinion on the letter written by the Power Division after which the decision to make payments will be taken," the sources continued.

The IPPs established under the pre-1994 Policy and the 1994 Policy also approached the government to at least clear their payments instead of waiting for the last day of the agreed date.

IPPs which signed agreements with the Government against payments of agreed amount of Rs 400 billion are uncertain about the government’s intent.

Nepra has not yet finalized amendments to PPAs and revised tariffs of power plants established under the Power Policy 2002 due to which Power Division has not processed their case so far.

IPPs established under the Generation Policy 2002 have warned that if the agreed 40 per cent amount is not paid, they will not be able to ensure fuel stocks.

Copyright Business Recorder, 2021

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