ISLAMABAD: The Private Power & Infrastructure Board (PPIB) has granted a 12-month extension in financial closure period under the Letter of Support (LoS) of 8.0 MW Kathai-II hydropower project.
Managing Director PPIB, Shah Jahan Mirza recently apprised the Board that the main reason for extension is non-availability of security package for Small Hydro Power Projects (SHPPs) and the Project’s Committee of Board, in its seventh meeting, recommended a 15-month extension.
The representative GoAJ&K enlightened the Board about the bottlenecks faced by SHPPs and the impact of non-availability of security package, which if continued, may delay the project indefinitely.
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Secretary Power Division, who is also the Chairman of PPIB Board, expressed the concern that electricity produced by SHPPs in AJ&K is utilized within AJ&K, whereas the payment to power producers is made by GoP. The bill collection from consumers is never repatriated to GoP, which adds to payment obligations of CPPA-G. lf the GoAJ&K intends to extend patronage to SHPPs then it should either take payment responsibility or streamline arrangements for payment of electricity to GoP.
The representative of GoAJ&K opined that payment to power producer by the GoP and electricity bill collection from consumers in AJ&K are two independent matters and may not be interlinked. However, he agreed that payment of bill collection proceeds to the GoP should be streamlined and GoAJ&K will take necessary measures to ensure it.
MD PPIB, while agreeing to the Chairman’s concern, added that although power produced by this project will not be utilized in Pakistan, yet, at the same time, it will reduce IESCO’S load by 8.0 MW as power requirement in AJ&K will be the same.
After deliberations and considering Projects’ Committee’s recommendation of 15-month extension, the Board agreed to grant extension of 12 months in FC date under the LoS. However, the Board approved extension in the financial closing date under the LoS of 8.0 MW Kathai-II hydropower project for a period of twelve months ,i.e., from August 18, 2022 to August 17, 2023 subject to the following:
Extension will be granted on the basis of the Single Performance Guarantee, in line with Clause 8.4, (ii) C of the Power Generation Policy 2015, as the reasons for the delay in achievement of Financial Closing were beyond the reasonable control of the Project Company. The Project Company shall extend the validity of the Bank Guarantee three months beyond the allowed period of extension and pay LoS extension fee applicable under PPIB Fee Rules (as amended from time to time).
Copyright Business Recorder, 2023
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