The Narowal Energy Limited_ a wholly-owned subsidiary of The Hub Power Company Limited (Hubco) under the 2002 Power Policy and the Committee for Negotiations with Independent Power Producers- constituted by the Federal Government has executed a Memorandum of Understanding (MoU).

HUBCO informed that under the terms of the MoU the ROE/ROEDC rate shall be changed from current 15pc in US$ to 17pc in PKR with no future US$ indexation.

The US$ equity shall be converted to PKR using an exchange rate PKR/US$ of 148. Whereas, Late Payment Surcharge (LPS) will be lowered to KIBOR + 2.0pc for the first sixty (60) days and then shall revert to KIBOR + 4.5pc as per the PPA, while ensuring that payments follow the PPA mandated FIFO payment principles for this rate to be effective.

The Parties have agreed that as and when the Competitive Trading Arrangement is implemented and becomes fully operational, the power plant shall move to Take and Pay as per the terms defined in the Generation License.

The Parties agreed payment of the receivables of the IPPs are an integral part of the MoU. The Power Purchaser and the Federal Government will devise a mechanism for repayment of the outstanding receivables with agreement on payment of receivables within an agreed time period, which will be reflected in the final agreement to be signed.

It further said that the terms of the MoU are subject to approval of the Board of Directors of Narowal Energy Limited and Hubco, as well as NEPRA and the Federal Cabinet and execution of a final agreement between the parties.

HUBCO said that the MoUs being finalized and pertaining to the Power Plants operating under the 1994 Power Policy do not apply to it as the Company was incorporated prior to 1994 Policy and is a stand-alone negotiated deal.