ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is all set to scrap the generation licence of Habib Ullah Coastal Power Company (HCPC) at the request of the generation company, official sources told Business Recorder.
On June 26, 2023, the power company in a letter to Nepra had informed that it got a generation licence on August 23, 2003, which was subsequently modified on December 5, 2016 and November 11, 2020 by the Authority.
The power plant completed 20 years of operation in September 2019 according to the following concession agreements; (i) Power Purchase Agreement (PPA) of March 25, 1996, between Habib Ullah Coastal and WAPDA; (ii) Implementation Agreement of March 20, 1996 between HCPC and the president of Pakistan for and on behalf of Pakistan; and (iii) Gas Supply Agreement (GSA) of March 31, 1996, between HCPC and SSGCL.
According to the company, all concession agreements expired on September 11, 2019, and the power plant was shut down, accordingly. The generation licence was modified in 2020 considering initiatives taken by the Power Purchase; i.e., CPPA-G and the company to operationalise the plant on indigenous gas. The CPPA-G Board approved the settlement agreement and amendment number 2 to PPA in May 2021 and forwarded the case to Power Division for ECC approval. The matter has been in abeyance since then.
The HCPC Board and sponsors after a careful review of the company’s financial condition and prevailing economic condition of the country decided to surrender/ cancel the generation licence based on the following; (i) no decision in the last four years by the concerned authorities to decide plant status; (ii) heavy losses incurred by the company in maintaining the status quo. The delay in the decision dragged HCPC to the brink of financial collapse. The current company’s financials and prevailing economic conditions of the country made the project unviable for the sponsors, and (iii) the HCPC power plant was removed from the IGCEP 2022-31 as approved by Nepra.
The HCPC has payables and receivables from CPPA-G on past invoices. The company already initiated the process of their settlement with CPPA-G and hopes to complete the process in the next couple of weeks. The HCPC receivables from CPPA-G are more than payables. The company has a dispute with SSGC on a short supply of gas and subsequent liquidated damages imposed by CPPA-G. The matter was previously arbitrated in favour of HCPC. However, a small portion of liquidated damages were in dispute by the SSGC from 2019 and the matter is currently before the Sindh High Court (SHC).
The Nepra is of the view that the request of HCPC is in an advanced stage of processing. Meanwhile, the NTDC has apprised it has already submitted its comments regarding the disconnection of M/s HCPC from the national grid.
Copyright Business Recorder, 2024
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