ISLAMABAD: Private Power & Infrastructure Board (PPIB) has urged the State Bank of Pakistan (SBP) to allow import of necessary equipment to M/s Rousch Power to avoid potential negative financial/ legal implications for both the GoP and the company.
In a letter to Executive Director, Exchange Policy Department of SBP, Managing Director PPIB, Shah Jahan Mirza has given the reference of previous letters written by to M/s Rousch (Pakistan) Power Limited of October 17, 2022 and PPIB’s own letter of August 25, 2022 in this regard.
PPIB argues that the matter of approval for opening of LCs/ contract registration/ opening of accounts of various IPPs is still pending.
M/s Rousch has noted that it needs urgent approval of items like major hardware for control system, modules/ cards for control system (mandatory requirement for project, post commissioning equipment).
The company has further noted that both 2nd and 3rd shipments have already arrived at Lahore airport and timely SBP approval will enable the power company to proceed smoothly with contractual obligations with the GoP and with M/s Siemens. The replacement of control system within the current outage window shall ensure the continued availability of plant to national grid for power generation.
According to PPIB, pursuant to provisions of Implementation Agreement (IA) executed between the company and the GoP, the latter under section 10.4 of the IA, is contractually obligated to make necessary arrangements for availability of foreign exchange, in case of it not being arranged through normal banking channels.
Further pursuant to its Power Purchase Agreement (PPA), the company under its contractual obligation is required ensure supply to the national grid. Thus, failure to process payment for such imports would render the company unable to fulfil its obligations under the PPA, which will have potential negative financial/ legal implications for both the GoP and the company.
Considering the facts and in order to avoid any potential litigation, SBP has once again been requested to facilitate the company on urgent basis to allow them to carry-out periodic maintenance of the generation plant and machinery to fulfil its contractual obligation under the IA/ PPA.
SBP vide its EPD circular 11 has advised banks to seek prior approval from its foreign Exchange Operations’ Department (OED) for initialling import transactions against items. Many IPPs have sought permission from SBP for opening of LCs related to foreign exchange to import spare parts for maintenance of their plants. Further, due to delay in opening of L/Cs, the maintenance of generation plants is getting delayed, and in case, IPPs are unable to get approval for opening requisite LC, power plants operations may be hampered and eventually cause shortfall of generation and contractual dispatch to the National Grid.
M/s Rousch maintains that its maintenance outage began on October 16, 2022. The major activity during this outage is the change of control system of gas turbines. The material required is in four shipments out of which one has reached the plant after SBP approval. Now, the approval of two further shipments is immediately required from the SBP.
Copyright Business Recorder, 2022