ISLAMABAD: In the light of a decision of a meeting of the Cabinet Committee of Energy (CCoE) of July 15, 2021, the Implementation Committee is likely to meet during this week to decide how to secure Nishat Chunian IPP excess payment after receipt of a letter from National Accountability Bureau (NAB) as requested by Power Division or renegotiate again with the IPPs of the 2002 Power Policy to revisit the contracts despite approval of Federal Cabinet in February 21.
The sources said the revised contracts have already been approved by ECC, CCoE and Federal Cabinet during the second week of February 21 after a lot of deliberations and vetting of Arbitration Agreement by the Law Division which will determine the alleged past excess payment of these IPPs.
According to sources, revised contracts have already been signed by 12 IPPs established under the 2002 Power Policy after lengthy and hectic negotiations between the stakeholders.
The revised terms and conditions were also presented to NAB and whole negotiation process was appreciated by NAB through a press release issued after a meeting with the Implementation Committee.
At present, only the case of Nishat Chunian’s excess payment is pending with NAB in which securing Rs 8.3 billion excess payment was mentioned in a NAB letter of June 30, 2021.
The sources maintained that on payment of first installation of outstanding undisputed payables to IPPs as per revised contracts, revised terms will be effective and the Government will save billions of rupees every year in generation cost.
The major revised terms include rupee-based return for local investor instead of dollar-based, foreign investors return reduced to 12% instead of 15%, share in all future savings of fuel and operation maintenance costs, reduction in interest rate from KIBOR + 4.5% to KIBOR + 2% for first 60 days and resolution of past excess payments approximately Rs 56 billion against 2002 Power Policy IPPs through Arbitration Panel whose decision will be binding for both the parties without going for further appeal in foreign/local courts.
Moreover, heat rate test will also be conducted as per revised contracts to check actual efficiency of these plants.
Insiders in the Power Division argue that higher tariffs are being paid to these IPPs regularly since signing of revised contracts and Government has failed to obtain the benefits extracted out of these IPPs through revised contracts as payment of first installation of undisputed payables has not been made as promised.
“Payables are increasing daily due to indecisiveness, hidden vested interests, as the government has also to pay late payment surcharge in addition to regular payment of higher tariff to IPPs of 2002,” said an energy sector expert.
The IPPs of 2002 can charge maximum rate on account of deferral of payment of first installation despite determination of revised tariffs by Nepra, he added.
Copyright Business Recorder, 2021