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Pakistan Deaths
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ISLAMABAD: Power Division has reportedly sought the assistance of so-called "facilitators" with a view to getting a clean chit from National Accountability Bureau (NAB) on revised pacts signed with the Independent Power Producers (IPPs) so that payments may be made to power producers as per commitment, well-informed sources told Business Recorder.

The government had contractually agreed to pay 40 per cent of Rs 404 billion to the IPPs by March 29, 2021 but so far nothing has been paid by the Power Division with the justification that as the matter is with NAB no official is ready to take “the risk of 90-day confinement without bail”, the sources added.

"There is lot of discussion on payment of Rs 180 billion to the IPPs but no concrete measure has been witnessed so far," the sources said.

The authorities who were part of the Negotiation Team during parleys and signing of the revised agreements with the IPPs confirmed to this newspaper that a team of "facilitators" belonging to a prime security agency were informal members of the committee, attended almost all the meetings and were instrumental in convincing the IPPs to surrender a share of their profits in the national interest. The “facilitators” were also present at the time of signing of revised agreements between the Government and the IPPs.

"The facilitators are deeply concerned about non-payment of the agreed amount to the IPPs and are seeking the reasons for the default in obligations from top officials of Finance Ministry and Power Division," the sources continued.

As Prime Minister Imran Khan has replaced Minister for Energy, Omar Ayub Khan, with Hammad Azhar, the latter will first have to be briefed by the Ministry's bureaucracy and SAPM on Power and Petroleum, Tabish Gauhar, before deciding on how to proceed further.

NAB has told the Power Division that the government has full authority to execute the altered agreements though it took

suo moto and asked Power Division for all the 47 Memoranda of Understanding (MoUs) which were provided.

"NAB says it will do its job and Power Division should do its job but has not given any clean chit," the officials added.

Subsequently, Power and Finance Division have moved with extreme caution and want NAB to give a clean chit before proceeding further even though the delay is compounding Late Payment Surcharge (LPS) which, in turn, is increasing the stock of circular debt.

The issue came under brief discussion in a meeting of Economic Coordination Committee (ECC) of the cabinet on April 7, 2021 but was not part of the agenda of its April 14, 2021 meeting.

Power Division stated that Finance Ministry should take the lead on the payment issue. With the two main players till now – Dr Hafeez Shaikh as head of Implementation Committee and Omar Ayub - out of the picture the ball is now in the court of the newly appointed Finance Minister, Shaukat Tarin.

"We want at least payment be made to projects established under pre 1994 Policy and 1994 policy including Hubco and Kapco," an official said adding that Cabinet should validate the payments.

IPPs maintained that it was an "extremely sad state of affairs as we fast move towards default due to nonpayment of large over-dues and paltry routine payments by Central Power Purchasing Agency-Guarantee (CPPA-G).

Those IPPs which gave concessions to government in the larger national interest feel that they have made a huge mistake by trusting the Government of Pakistan. Now, they are not only deprived of the payment agreed but are also not getting normal payments except very small amounts which exposes them to serious financial crunch potentially leading to defaults and shutdown in the hot summer months. "Any defaults by IPPs will have severe repercussions for the under construction CPEC projects and will further exacerbate the negative sentiments of international investors," said one of the representatives of IPPs.

According to the IMF, the government has agreed to settle outstanding arrears to the IPPs of which it scheduled to pay two fifth by end May 2021 and the rest agreed in August 2021.

In this vein, the stock of CPPA-G payable to power producers will decline through a payment of up to Rs 180 billion by end May 2021 (new structural benchmark for end-May 2021).

Copyright Business Recorder, 2021