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ISLAMABAD: M/s Hubco has served dispute notice to Central Power Purchasing Agency –Guaranteed (CPPA-G) under Power Purchase Agency (PPA) on deductions made in the company’s Capacity Purchase Price (CPP) invoice for the period of July-September 2021, well informed sources told Business Recorder.

M/s Hubco’s Chief Executive Officer (CEO), Kamran Kamal, in a letter to CEO, CPPA-G has elaborated on the reasons for sending dispute notice to the power purchaser. According to Kamal, the letter is a continuation of various discussions, WhatsApp messages, Hubco’s letter of November 12, 2021 and subsequent exchange of position papers on the matter of Project Company Entity (PCE) exchange rate between CPPA-G and Hubco by email.

While the matter is under discussion between CPPA-G and Hubco, the latter is constrained to issue this Dispute Notice as stipulated in the PPA in order to secure its legal position, he said, adding that once the matter is amicably resolved, the power firm will accordingly withdraw the Dispute Notice.

“We reiterate the submissions made in our letter and Hubco’s position paper, both of which be treated as an integral part of our submissions and request CPPA-G to reverse the deductions made in PCE component of company’s CPP invoices for the months Jul-Sep 2021 and make payment as per submitted position,” he added.

As per the terms of PPA Amendment Agreement dated February 11, 2021, until such time that PKR/USD exchange rate reaches 168.6 the applicable indexation for the half year (Jan-Jun 2021) shall apply on the PCE component. The relevant extract of Clause 3.2 of the agreement states:

Suspension of gas supply: Two power companies issue OFME notices to CPPA-G

“For avoidance of doubt until such date, the National Bank of Pakistan TT/OD selling PKR exchange rate reaches PKR I68.60/USD, the USD/PKR exchange rate and USCPI applicable as per the existing arrangement under PPA for the current half year (i.e., January 2021 - June 2021) shall apply.”

However, CPPA-G, while verifying the invoices, applied the indexation on the PCE component as per original PPA and made deduction from Hubco’s CPP invoices. CPPA-G has contended that clause 3.2 refers to the indexation mechanism applicable for the said half year and not the indexation itself. However, Hubco has shown disagreement with the position taken by CPPA-G, as the “period current half year (i.e., January 2021-June 2021)” was expressly stated in the PPA Amendment Agreement to signify that the indexation applicable and already computed for this specific period was set as a lower limit (floor). The reasons have already been explained and covered in the position paper.

“We request CPPA-G to review the matter in light of position paper and reverse the deductions made on account of indexation of PCE from CPP invoices for the months of July-September 2021 and make the necessary payments as submitted,” Kamal added.

Copyright Business Recorder, 2022

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