Imported coal-fired IPPs: PMO seeks update on capacity payment deduction issue

ISLAMABAD: Prime Minister Office (PMO) has sought update on capacity payments deduction issue between Chinese coal-fired IPPs and Central Power Purchasing Agency-Guaranteed (CPPA-G), well informed sources told Business Recorder.

The same issue was discussed in “progress review meeting of CPEC” on March 24, 2023 under the chairmanship of Minister for Planning, Development and Special Initiatives whereas Power Division explained the critical issue of capacity payment deduction of imported coal-fired CPEC IPPs.

Power Division stated that CPPA-G is deducting the capacity payment of imported coal-fired CPEC IPPs because IPPs are unable to dispatch electricity. And these IPPs are unable to dispatch electricity because of unavailability of forex for import of coal; therefore, Power Division requested Minister for Planning, Development and Special Initiatives to convene an exclusive meeting on this critical issue.

IPPs: Power Div asked to resolve payment issues on priority basis

Subsequently, this meeting was arranged under the chairmanship of Minister for Planning, Development and Special Initiatives on March 25, 2023 which was attended by Nepra, Power Division and Finance Division, wherein all the participants acknowledged that the deduction of capacity payments in the explained scenario is not justified because the GoP is responsible for forex arrangements under the Implementation Agreement (IA).

After detailed deliberations, Minister for Planning, Development and Special Initiatives directed that another follow-up meeting on the same day be arranged to sort out the amount with the Power Division and two CPEC IPPs (1320-MW Port Qasim and 1320-MW Sahiwal).

The sources said in the follow-up meeting with Minister for Planning, Development and Special Initiatives the following decisions were taken: (i) immediate stoppage of capacity payment deduction to the extent of forex unavailability for buying coal; and (ii) for settlement mechanism for the already accumulated on account of capacity payment deduction.

These directions were communicated to all stakeholders in an Office Memorandum (OM) on March 25, 2023 (same day).

After that, one more follow-up meeting was held on March 31, 2023 under the chairmanship of Minister for Planning, Development and Special Initiatives, wherein the Minister directed stakeholders to draft a road map for resolution of this issue by April 3, 2023 through evolving consensus on the following aspects: (i) immediate stoppage of capacity payment deduction to the extent of forex unavailability for buying coal; (ii) settlement mechanism for the already accumulated amount on account of capacity payment deduction; (iii) Power Division to draft a “ Road Map” and a summary for ECC/ Cabinet for settlement of the issue in line with already signed IA/ PPA or with the amended IA and PPA. Power Division may take opinion from Law Division accordingly; (iv) Power Division will provide one pager for Minister for Planning by April 3, 2023 for further discussion of the matter with Chairman of IPPs companies in Beijing.

Copyright Business Recorder, 2023