ISLAMABAD: The Private Power & Infrastructure Board (PPIB) has expressed willingness to alter draft framework agreement with Saudi Arabia to proceed further on renewable energy projects.
Saudi Arabia’s Ministry of Energy recently raised questions on the need for new agreement on development of renewable energy projects in the presence of existing a Memorandum of Understanding (MoU).
Pakistan embassy in Riyadh (Saudi Arabia) which held discussions with Saudi Ministry of Energy, suggested to Islamabad that “Inter-Governmental Commercial Transaction Act 2022” be placed in the framework agreement, and Pakistan may look into the possibility of amending the 2019 MoU to include its reference in clause 2 of Article 3. Clause 3 of Article 10 of the 2019 MoU provides basis for making amendments, and Article 4 of the 2019 MoU allows for formation of a joint team (if necessary) to monitor the implementation of the MoU.
Renewable energy projects: Saudi ministry raises questions over ‘need for new pact’
PPIB sent its reply to the letter of Ministry of Foreign of March 08, 2024, on the issue titled “Update. Saudi response on draft G2G agreement on projects in energy sector.”
According to Managing Director, PPIB, Shah Jahan Mirza, Government of Pakistan and Government of Saudi Arabia signed an MoU on February 17, 2019, for investment in the PPIB on renewable energy sector of Pakistan.
However, the Inter-Governmental Commercial Transactions Act 2022 which provides the legal framework for the development of projects under the Government-to-Government (G2G) mode, was enacted on November 4, 2022. Under the provisions of the IGCTA, it is required that an MoU or a G2G Framework Agreement be executed between the two governments to facilitate the development of such projects.
The PPIB maintains that the IGCTA does not have a retrospective application to MoUs/Framework Agree-ments executed before its enactment
Considering the foregoing and the fact that the earlier MoU cannot be utilized as the legal basis for the development of RE projects under the G2G mode, a new Framework Agreement under IGCTA for the development of projects on G2G mode was prepared and shared with the Saudi side for their review, finalization, and execution in order to proceed further with the implementation of RE projects on G2G mode.
The PPIB further explained that the GoP remains flexible and open to making any necessary adjustments to the draft Framework Agreement shared with the Saudi side, should they be required, to ensure alignment with the interests and objectives of both parties.
Furthermore, the possibility of using the existing MoU for the development of projects under the G2G mode can also be considered. This would involve making an amendment to the MoU, referencing IGCTA, after clearance from the Law Division, if such action is desired by the Saudi side.
The PPIB believes that this updated approach will strengthen collaboration and pave the way for the successful implementation of renewable energy projects for mutual benefit.
Copyright Business Recorder, 2024
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