‘No capacity payments’ received since PPA expiry in October 2022, says KAPCO

Pakistan’s power producer Kot Addu Power Company Limited (KAPCO) has rejected reports it is receiving payments without generating electricity.

In a notice to the Pakistan Stock Exchange (PSX) on Wednesday, KAPCO clarified that no capacity payments have been made to the company by the power purchaser since the Power Purchase Agreement (PPA) expired on October 24, 2022.

However, the company said it has received payments of overdue receivables from the power purchaser, relating to the period up to the end of the PPA, and these have been properly reported in the financial statements of the company.

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In its notice, the power producer informed that it entered into a suite of agreements including the PPA in June 1996 at the time of its privatisation by the Privatization Commission, Government of Pakistan.

“The term of the PPA was for 25 years, which was set to expire in June 2021,” it said.

The company informed that under the terms of the Third Amendment to the PPA and Master Agreement, the pending dispute of liquidated damages with the power purchaser was settled and consequently the term of the PPA was extended by 485 days (approximately 16 months) till October 24, 2022.

“For the extended period of 485 days, the company did not charge any capacity payments but was obliged to keep its power plant available to the power purchaser for generation during this period,” it said.

KAPCO shared that since the expiry of the PPA on October 24, 2022, due to absence of an operating regime, the company’s power plant is in preservation mode.

The company said its tariff application is pending final determination before the National Electric Power Regulatory Authority (NEPRA).

KAPCO informed the bourse that it has a unique feature of 220KV-132KV switchyard and this facility is being provided to the power purchaser on special request from Ministry without any compensation from the date of expiry of PPA.

KAPCO power plant is Pakistan largest combined cycle power plant. The plant comprises of 10 multi fuel fired gas turbines and five steam turbines.

IPPs and power generation have become acute issues in Pakistan amid a surge in energy tariff that has come in tandem with hours-long loadshedding. Many protests and demonstrations have looked to highlight the issue, forcing the government to come up with so-called relief measures including a Rs50-billion subsidy package for three months, extending due date on electric bills by 10 days, and pursuit of re-profiling of debt on energy projects with the Chinese.