ISLAMABAD: M/s Liberty Dharki Power Limited (LDPL) has withdrawn Other Force Majeure Event (OFME) notice served on Sui Northern Gas Pipeline Limited (SNGPL) after restoration of gas supply to the power complex, well-informed sources told Business Recorder.
Emran Ahmed Khan, Co-Chief Executive Officer, LDPL, in letter to CEO CPPA-G and Managing Director SNGPL has stated that through its letter of March 17, 2023 declared Other Force Majeure Event under Article 13.1(c) of the Power Purchase Agreement (PPA) read with Section 2.8 of the Settlement Terms of the PPA Amendment.
The notice was necessitated following the suspension of gas supply to the company’s power generation complex by Sui Gas Pipeline Limited on March 17, 2023.
Payment dispute with SNGPL: LDPL serves notice of force majeure under PPA
Subsequently, in response to Liberty Dharki Power Limited’s request, the SNGPL, in its letter of April 5, 2023 informing to the company to restore the gas supply and complex was synchronised with the grid on April 5, 2023 at 2023 hrs after necessary gas treatment process.
The complex achieved base load of 225 MW on April 5, 2023. Accordingly, the company declared full availability of the Complex to NPCC.
Co—CEO, LDPL, in his letter has conveyed that based on restoration of gas supply, to Liberty Dharki Power Limited has notified SNGPL of the cessation of OFME of the Complex
Earlier, the power company communicated cessation of Other Force Majeure Event to CPPA-G through cessation of OFME letter.
However, despite sharing of CPPA-G payment plan with the SNGPL and personal follow-ups with their management, the SNGPL has again suspended gas supply by giving instructions to the Plant Manager, Qadirpur Field vide SNGP Gas Suspension Letter. The company has reproduced Section 2.8 of the Settlement Terms which is annexure B to the PPA Amendment Agreement executed on 15 October 2021, as follows:
“Further understandings: The Parties further agree and declare that outside of any OFME period, any future outage or failure or interruptions to the complex’s generating capability and/or failure to deliver Net Electrical Output on account of non-supply of fuel by any of the Fuel Suppliers shall: (1) release the Company from any obligation to use backup fuel, (2) not to be treated as a Forced Outage/Partial Forced Outage under the PPA; and (3) be treated as an Other Force Majeure Event under the PPA.”
The company had argued that the performance of the Company to operate the Complex and to discharge its contractual obligations under PPA had been constrained on account of suspension of gas supply by the gas supplier, which is beyond the reasonable control of the Company, and as a consequence thereof, the company has declared Other Force Majeure Event under Section13.1(c) with effect from 14:15 hrs of March 17, 2023.
According to the company upon declaration of Force Majeure, it would be excused from the performance of its obligations under the PPA and shall not be liable for any failure in performing such obligations till such time the gas supply is restored by the SNGPL.
The power company had emphasized that while the cause of OFME stems from delay in payments by CPPA-G, the LDPL and power consumers are left to suffer the consequences.
Copyright Business Recorder, 2023