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ISLAMABAD: The Independent Power Producers Advisory Council (IPPAC) has sought appointment from Secretary Power this week to discuss issues of IPPs mainly on matter of arbitration.

The IPPAC, in its letter to Secretary Power has stated that CEO, Halmor Power Generation Company Limited, Zaheer Ahmed, CEO Nishat Chunian Power Limited, Farrukh Ifzal and CEO, Liberty Power Tech Limited, Azam Sakrani will represent IPPAC in the meeting.

M/s Attock Gen Limited, M/s Saif Power Limited, M/s Lalpir Power Limited, M/s Pakgen Power Limited, M/s Rousch Power Limited, M/s Atlas Power Limited and M/s Liberty Power Tech Ltd, have also written letters to PPIB and sought help for opening of L/Cs for import of machinery and spare parts required for maintenance of plants.

SBP vide its EPD circular 11 has advised banks to seek prior approval from its Foreign Exchange Operations Department (FOED) for initiating import transactions against items mentioned in the Annex of the said circular.

According to sources, IPPs, in their letters have referred to their earlier letters, wherein they have requested SBP for approval of opening of L/Cs which are related to foreign exchange payment for import of spare parts required for periodic maintenance of power plants.

Further, due to delay in opening of L/Cs, the maintenances of generation plants are getting delayed, and in case IPPs are unable to get approval for opening requisite L/Cs, power plants operations may be hampered and eventually cause shortfall in generation and contractual dispatch to the national grid.

It was also highlighted that the non-availability of requisite foreign currency may result in lapse of consent under Implementation Agreement (IA) that would expose GoP to various potential litigations accruing financial obligations thereon.

Pursuant to provisions of Implementation Agreements executed between the IPPs and GoP, the latter, under Section 10.4 of the IA, are contractually required to make necessary arrangements for availability of foreign exchange in case if it is not arranged through normal banking channels. And pursuant to provisions of Power Purchase Agreements (PPA), IPPs, under their contractual obligations are required to maintain plant in order to ensure smooth operations and reliable supply of electricity.

Thus failure to process payment for such imports would render Companies unable to fulfil their obligations under the PPA, which may have implications for GoP and the IPPs, said DG PPIB in his letter.

PPIB, which provides one-window facilities to the private sector power generation companies, has also supported the proposals saying that that considering the issues of IPPs, SBP should facilitate the requesting power generation company or companies for opening of such L/Cs to timely carry out periodic and breakdown maintenance of generation plants and machinery to fulfil its contractual obligations in an efficient and timely manner.

Copyright Business Recorder, 2022

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