Tarin asks PD to place KE-related draft agreements before CCoE

03 Mar, 2022

ISLAMABAD: Finance Minister, Shaukat Tarin has directed Power Division to place KE-related three draft agreements i.e., PPAA, ICA and TDS before the Cabinet Committee on Energy (CCoE) in its forthcoming meeting, well informed sources told Business Recorder.

He gave these instructions while presiding over an inter-ministerial meeting, convened on the request of Privatisation Commission to sort out pending issues related to some transactions. The three agreements, which will be signed between KE, NTDC and CPPA-G, will pave the way for signing of Arbitration Agreement (AA).

Finance Minister has also directed Privatisation Commission (PC) to share KE’s proposed draft Arbitration Agreement (AA) with the Attorney General for Pakistan.

Sharing the background of KE issues, Privatisation Commission apprised that the issuance of National Security Certificate (NSC) by Privatisation Commission for transfer of KES’s 66.4% shares in KE to Shanghai Electric Power Company Ltd (SEP) has been intrinsically linked to Karachi Electric’s payables/ receivables with the government parties. This issue has remained under consideration at various decision-making forums of the government. It was finally agreed among the stakeholders to resolve this issue through arbitration.

According to PC, after a general consensus of the stakeholders on draft Arbitration Agreement in March, 2021, the matter was presented before ECC for recommending further course of action to the Cabinet. ECC in its meeting held on May 21, 2021 decided that Power Purchase Agency Agreement (PPAA) and agreement on Tariff Differential Subsidy (TDS) are to be initially signed in order to address the future payment issues.

A Committee was also constituted by the ECC to finalize the draft AA with KE. The decision of ECC was ratified by the Cabinet. Approvals of the proposed pacts are still in process in the Power Division. PC will proceed further subsequent to convening a meeting of the Committee for finalizing the draft AA to address the issue of past receivables/ payables of KE.

On Feb 15, 2022 KE furnished a modified draft AA, after replacing the words ‘equity and fairness’ appearing in clauses 3 and 5 of earlier draft.

After deliberation on the matter, Finance Minister directed that the fresh draft AA shared by KE be forwarded by Privatisation Commission to Attorney General for Pakistan for views comments. Further, Power Division shall submit the drafts of PPAA, Inter Connection Agreement (ICA) and agreement on Tariff Differential Subsidy (TDS) to CCoE for its consideration/ decision in its next meeting.

Last month, a high-level delegation of KE headed by the power utility’s Board Chairman held meeting with top authorities including Finance Minister and requested them to expedite the requisite approvals. Finance Minister assured the KE delegation that he would follow the matter personally.

On March 1, 2022, during a public hearing on KE’s FCA and QTA, at Nepra Chief Financial Officer (CFO) KE, Aamir Ghaziani, noted that most of the issues related to PPAA, ICA and TDS have been sorted out and approvals from concerned authorities will be obtained soon.

Copyright Business Recorder, 2022

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