ISLAMABAD: Three Independent Power Producers (IPPs) have served notice to Government of Pakistan (GoP) for default in payment of Rs 15.2 billion on due date of invoices under respective Power Purchase Agreements (PPAs), sources in PPIB told Business Recorder.
According to PPIB, pursuant to Section 1.5.1 of the respective Guarantees of April 30, 2008, and January 3, 2008 read with Section 16.9 of the respective PPAs, Engro Powergen Qadirpur Ltd (EPQL) Nishat Chunian Power Ltd (NCPL) and Nishat Power Ltd (NPL) have served separate notices to PPIB on behalf of the Government of Pakistan stating that the power purchaser (CPPA-G) has purportedly failed to make payment of Rs 9.791 billion to EPQL, Rs 2.760 billion to NCPL and Rs2.687 billion to NPL (in total Rs15.238 billion approximately) under the respective PPAs.
Pursuant to the terms of the Guarantee, after the expiry of 30-day period from the date of such notices, the three IPPs may call upon GoP to make payment of such due and payable amounts. In such eventuality, GoP shall then be liable to make payments within 10 days.
According to Director General, Dr Munwar Iqbal as the purported payment default under the respective PPAs may have serious consequences for the CPPA-G besides having adverse effect on GoP’s guarantee obligation, Ministry of Energy (Power Division) has been requested to intervene for the earliest release of the due and payable amounts to the three IPPs, under the respective PPAs.
EPQL, in its notice has stated that it calls upon the power purchaser to make payment to it of the overdue and unpaid amount of Rs9.791 billion as provided under the applicable provisions of the PPA.
In case, payment is not made within 30 days following this notice, a Power Purchaser Event of Default in terms of Section 16.2(b) (Power Purchase Events of Default) of the PPA shall occur, thereby entitling the company to proceed in the manner stipulated by the provisions of the PPA, including Article XVI (Termination).
This shall be without prejudice to and shall not preclude the company from exercising other remedies that are provided in the PPA, IA or are available in law.
Nishat Power, in its notice has stated that the company is constrained to hereby deliver upon the Power Purchaser the instant notice as contemplated by Section 16.2(b) (Power Purchaser Events of Default) of the PPA. Capitalized terms used and not otherwise defined herein shall have the meaning given to them in the PPA.
Section 9.6 (payment) of the PPA stipulates that the power purchaser must pay the company the undisputed amount shown on an invoice delivered in accordance with section 9.5 (billing) of the PPA on or before 30 days, following the day the invoice is received by the power purchaser.
However, the power purchaser has failed to make payments of invoices amounting to Rs2.687 billion by the due date of such invoices. Consequently, a payment default of the power purchaser has occurred and is continuing.
In view of the foregoing, the company has called upon the power purchaser to make payment to the company of overdue and unpaid amount of Rs 2.687 billion with interest at delayed payment rate as provided under the applicable provision of the PPA. In case, the payment is not made within 35 days following the notice, a Power Purchaser Event of Default in terms of section 16.2(b) (power purchaser events of default) of the PPA shall occur, thereby entitling the company to proceed in the manner stipulated by the provisions of the PPA including Article XVI (termination).
This shall be without prejudice to and shall not preclude the company from exercising other remedies that are provided in the PPA or available by law. A copy of this notice has also been given to the GoP (PPIB) under section 16.9 of the PPA.
Copyright Business Recorder, 2022