ISLAMABAD: The Private Power & Infrastructure Board (PPIB) has granted three months (till December 31, 2023) extension in financial close date to M/s Thar Coal Block-l (TCB-1) Power Generation Company Limited, sources close to Managing Director PPIB told Business Recorder.
Briefing Technical Committee of PPIB, MD PPIB explained that the construction of the project has been completed through sponsors' own resources and COD has been achieved in February 2023. However, even after fulfilment of all pre-requisites of FC, the delivery of Lenders Notice pursuant to Implementation Agreement (IA) remains the only outstanding issue.
According to MD PPIB, the lenders are reluctant to release Lenders Notice in absence of Sinosure Policy. In this regard, TCB-1 has noted that insurance policy has been approved by Sinosure Board, but it still requires approval from Government of China to make it effective.
In order to inject cheap electricity into the national grid, the ECC of the Cabinet on October 31, 2022, permitted effectiveness of PPA from the date of its execution and authorized CPPA-G to amend PPA without any change in the approved tariff, MD PPIB stated while clarifying that although PPA has been made effective and Required Commercial Operation Date (RCOD) of the project has been achieved and cheaper energy is being injected into the National grid yet without the effectiveness of the IA and GoP Guarantee, this is a huge risk taken by sponsors.
Responding to a question, MD PPIB clarified that FC extension does not require approval of ECC and is the mandate of PPIB Board. Representative Govt of Punjab expressed concern that if TCB-I has given standby LCs in favour of CPPAG then why not PG under LOS may be released as investor is being burdened of two guarantees.
MD PPIB explained that releasing Performance Guarantee (PG) before achievement of FC may be against the SOPs, as well as, violation of Policy. It will be a deviation from already laid down fundamental procedure, seeking approval of which will be way too lengthy and complex process. However, it may be released in near future after achievement of FC. Letter of support (LOS) is still valid and sponsors understand that PG is necessary for extension in FC date.
Representative Govt Sindh expressed concern that full power evacuation is not possible from Thar coal Block-II due to delay in completion of transmission line from Thar to Matiari and its current capability is limited to only 1800 MW whereas available power is around 2500MW at Thar.
Although this question relates to NTDC, yet MDPPIB explained that active development is being done on the project and is expected to be completed by end of April or May 2023. On a question from NTDC regarding capacity payments, MD PPIB explained that PPA is fully effective, under which capacity payments are due after COD. The Committee unanimously agreed that under clause 8.4 (ii) (c) of Power Policy 2015, an extension up to December 31, 2023, in FC be recommended to PPIB Board on basis of already doubled performance guarantee, as the reasons for the delay are beyond reasonable control of the Project Company.
Copyright Business Recorder, 2023