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Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,072
6824hr
Pakistan Cases
1,218,749
2,92824hr
5.08% positivity
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448,658
Punjab
419,423
Balochistan
32,707
Islamabad
103,720
KPK
170,391

ISLAMABAD: National Accountability Bureau (NAB) has reportedly allowed Power Division to process payments of Independent Power Producers (IPPs) of Power Policy 2002 as per the revised contracts, well-informed sources told Business Recorder.

On June 16, 2021, Power Division informed the Economic Coordination Committee (ECC) of the Cabinet that on a summary submitted by it on May 5, 2021 ECC decided and Federal Cabinet ratified the following decisions of the ECC on May 18, 2021; (i) payments to all IPPs (under the Pre-1994, 1994 and the 2006 Power Policy) may be processed according to the signed agreements expect the IPPs under the Power Policy 2002 till the conclusion of the NAB investigation;(ii) the matter of the alleged saving in the tariff component of IPPs of 2002 Policy is already under investigation by NAB and; (iii) NAB may be requested to examine and validate the process of negotiations and signing of agreements including arbitration submission agreement. NAB may also inform if they have any objection to the signing of these agreements and making of payments to the IPPs of the 2002 Policy.

The sources said Power Division accordingly conveyed the decision of ECC, as ratified by the Federal Cabinet to NAB on May 25, 2021. In response to the letter by Power Division, NAB shared their views through their letter of June 08, 2021. The Cabinet decision required examination and validation of the process already completed by the Power Division. Whereas NAB agreed that IPPs of 2002 Policy are under investigation, they have declined to examine or validate the process, or to inform if they have any objection to these agreements or making payments to IPPs under these agreements.

According to sources, in view of the previous decisions by ECC and Federal Cabinet and response from NAB, the following proposals were submitted by Power Division for the consideration of ECC: (i) payments, to all IPPs under Power Policy 2002, which have signed agreements pursuant to MoUs, may continue to be withheld, till the NAB investigations are concluded; (ii) the process of signing Arbitration Submission Agreement with IPPs of 2002 policy and notification of their revised tariffs as determined by Nepra may remain suspended till NAB investigations are concluded.

The sources said on June 16, 2021, ECC deferred decision on the Power Division summary. However, NAB has now conveyed to Power Division that it can process payment process of IPPs of policy 2002 as per revised agreements.

According to sources, Power Division will now submit a new summary to seek ECC's nod in light of NAB's new communication.

As per revised contracts, with payment of first installation to the 2002 Power Policy IPPs reduced tariff will be applicable from the date of payment, increase in late payment charges will be stopped on their undisputed payables which will lead towards a reduction in circular debt, heat rate test will be conducted as these IPPs agreed that the government can determine heat rate test to find out actual efficiency of plants which will further reduce tariffs after the tests, and fuel saving will be shared with the government besides reduction in operation and maintenance cost varying between 15 and 20 percent. Approximately, Rs 180 billion plus will be the saving of government through these revised contracts.

Copyright Business Recorder, 2021

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